ChartBrief #21 Investor Confidence Index

0
ChartBrief #21 Investor Confidence Index

ChartBrief #21 Investor Confidence Index

The “State Street Investor Confidence Index” is a quantitative measure of investor confidence (as opposed to surveys) run by State Street (presumably using their vast client data as one of the world’d largest asset management custodians).  When the index rises above 100 it means institutional investors are allocating more money to risky assets (equities), and then it goes below 100 it means they’re allocating less to risky assets (and by implication more to cash/bonds).  The chart below shows the index by region (note when they say region they mean region of domicile of the investors – so it’s like Asian institutional investors as opposed to flows going into Asia per se).

Mohnish Pabrai On Low-Risk Opportunities And The Recycling Sector

Mohnish PabraiIn his book, The Dhandho Investor: The Low–Risk Value Method to High Returns, Mohnish Pabrai coined an investment approach known as "Heads I win; Tails I don't lose much." Q3 2021 hedge fund letters, conferences and more The principle behind this approach was relatively simple. Pabrai explained that he was only looking for securities with Read More

The reason I post this chart is for a couple of reasons, first of all someone requested it (in comments on this Seeking Alpha article), also by the way – it appeared in a previous edition of our institutional product: “Weekly Macro Themes“.   The other reason is there are some interesting trends worth pointing out. First is the surge in Asian institutional investor confidence, and the slump in European investor confidence. I noted elsewhere that those two indexes seem to work as leading indicators, so that’s something to consider when thinking about Asian vs European equities.  The other point is that North American institutional investor confidence has gone from extremely buoyant in 2015 to below the 100 point – but importantly, rebounded slightly in the latest reading.  No doubt political risk and uncertainty has a role to play in this, and with the election almost here – a clearing of that hurdle could clear the way for that index to go higher.  Watch this space…

Bottom line: European and North American investor confidence has slumped, while Asian institutional investor confidence has surged.

[drizzle][/drizzle]

Updated on

Topdown Charts: "chart driven macro insights" Based in Queenstown, New Zealand, Topdown Charts brings you independent research and analysis on global macro themes and trends. Topdown Charts covers multiple economies, markets, and asset classes with a distinct chart-driven focus. We are not bound by technical or fundamental dogma, and instead look to leverage any relevant factor to capture the theme. As such, here you will find some posts that are purely technical strategy, some that just cover economics and data, and some posts that use multiple inputs to tell the story and identify the opportunities. Callum Thomas Head of Research Callum is the founder of Topdown Charts. He previously worked in investment strategy and asset allocation at AMP Capital in the Multi-Asset division. Callum has a passion for global macro investing and has developed strong research and analytical expertise across economies and asset classes. Callum's approach is to utilise a blend of factors to inform the macro view.
Previous article Compounding
Next article Three Maps Help to Visualize America’s $18 Trillion Economy

No posts to display