Today State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), released the results of the State Street Investor Confidence Index for January 2009. Global Investor Confidence increased by 12.1 points to 60.3, from December’s revised level of 48.2. The move higher was led by North American institutional investors, whose confidence climbed 21.2 points from December’s record low of 30.6 to 51.8.
“The move up in Global Investor Confidence this month is the largest we have seen since August 2007,” commented Froot. “This is perhaps not surprising, with the Index having registered a record low in December. While institutions looked more favorably on risky assets this month than they did at any time in the fourth quarter of 2008, it remains to be seen whether these reallocations represent changes in long-term convictions about the value of those assets.”
“The rebound in confidence among North American investors is the most striking thing about this month’s results,” added O’Connell. “The increase represents a substantial improvement in outlook. While some of the increase is attributable to risk reallocations going into the New Year, it may also be true that institutional investors perceive that the risk of systemic collapse has abated somewhat in the wake of recent policy actions."
According to State Street, their “State Street Investor Confidence Index® measures the attitude of investors to risk. Developed by Harvard Professor Ken Froot and State Street Associates Director Paul O'Connell, the Index uses the principles of modern financial theory to model the underlying behavior of global investors. Unlike other survey-based confidence measures that focus on expectations for future prices and returns, the Index provides a quantitative measure of the actual and changing levels of risk contained in investment portfolios representing about 15% of the world's tradable assets.”
According to State Street, their “State Street Investor Confidence Index® measures the attitude of investors to risk. Developed by Harvard Professor Ken Froot and State Street Associates Director Paul O'Connell, the Index uses the principles of modern financial theory to model the underlying behavior of global investors. Unlike other survey-based confidence measures that focus on expectations for future prices and returns, the Index provides a quantitative measure of the actual and changing levels of risk contained in investment portfolios representing about 15% of the world's tradable assets.”
I currently follow six sentiment indicators in my newsletter. These indicators are:
- ISE (International Securities Exchange) Sentiment Index
- II-BBS: Investors’ Intelligence Bull Bear survey
- CBOE (Chicago Board Options Exchange) Put/Call Ratio (CPC)
- AAII Bull/Bear Ratio (American Association of Individual Investors)
- VIX (CBOE Volatility Index)
- State Street Investor Confidence Index
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