Investor confidence climbs 13.9 points

State Street Global Markets released the February 2022 results of the State Street Investor Confidence Index (ICI), revealing investor confidence rose by just under 14 points to 103.9.

The increase was driven by a leap in North American ICI to 106.2, as well as an 8.3-point rise in European ICI to 93.9. Asian ICI was the only one to fall by 0.2 points to 96.9.

“Investors’ sentiment improved sharply in February, with the index recording one of its biggest monthly gains since recovering from lows established in the early months of the pandemic,” Marvin Loh, Senior Macro Strategist at State Street Global Markets, said.

“Falling COVID caseloads and relaxed restrictions drove the improving outlook even as the hawkish view for central banks continues in the face of upside inflation surprises.”

Loh also said that the index’s movement back above 100 will be tested in the coming months amid mounting geopolitical concerns and impending rate hikes in developed markets.

“This may be especially true in the case of Europe, which has the lowest reading amongst the three regions tracked.”

Developed by State Street Associates, State Street’s research and advisory arm of the business, in partnership with FDO Partners, the ICI measures investor confidence and risk appetite by examining buying and selling patterns of institutional investors.

A high risk appetite or confidence is shown by a higher percentage allocation to equities in the index. A reading of 100 is neutral, meaning investors are neither increasing nor decreasing their allocations to risky assets.

The ICI also differs from traditional survey-based tools as it is based on the trades of institutional investors rather than their opinions.