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Investor confidence falls in November

Investor confidence falls in November

Investor confidence dipped in November, according State Street's Global Investor Confidence Index, as investors became more wary of markets.

The measure found investor confidence fell by 0.3 points down to 98.9, from October's revised reading of 99.2.

The index, which was developed by Kenneth Froot and Paul O'Connell at State Street Associates, measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

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Its measure shows the greater percentage allocation to equities, and the higher risk appetite or confidence, and a reading of 100 is neutral.

The global decline in sentiment represented by the index was driven by the 4.6 point decrease in the Asian Investor Confidence Index to 116.1 and the 2.6 point decline in the European Investor Confidence Index to 86.5.

The North American Investor Confidence Index rose slightly from 95.6 to 95.7.

MR Froot said: “While global markets continue to decipher the economic and political effects of a Trump presidency on the heels of Brexit, the decline in the Global Index suggests that institutional investors remain reluctant to embrace market reactions.

“It is yet to be seen whether the stress deriving from upcoming events, such as the OPEC meeting in November and the ECB and FOMC meetings in December, will have any additional impact to the risk sentiment before year-end.”

Jessica Donohue, executive vice president and chief innovation officer at State Street Global Exchange said: “Looking at investor confidence regionally, the setbacks in the ICI this month were felt most strongly by Asian-based institutional investors. Trump’s victory has clearly exacerbated anti-globalisation jitters.

“Moreover, confidence in Europe further declined to the mid-eighties, a relatively low level, as the UK’s exit from the European Union and Italian political risk remain a source of major concerns.”

ruth.gillbe@ft.com