Institutions remain overweight equity markets according to State Street’s latest investor confidence report. As a whole, the index was up just 0.2 points from last month’s reading of 104.3. Results were mixed by region as North America posted a 4.4 point gain, Europe posted a 5.6 point loss and Asia gained 0.6 points.
Ken Froot, co-founder of the index and Harvard University Professor, says the gains in Asia reflect continued confidence in China’s recovery:
“Institutional investors had a number of competing claims on their attention this month. Impressive growth numbers out of China for 2009 buttress anecdotal evidence that expansion continues apace there, lending a positive tone to a number of asset classes. At the same time, there is some evidence that while activity has picked up to a substantial degree in the developed markets, the recent pace of improvement may be difficult to sustain, all the more so against a backdrop of uncertainty around monetary policy and regulatory change more generally.”
Paul O’Connell of State Street says the schism between North America and Europe is growing as concerns over sovereign debt and the sustainability of the recovery make Europe less attractive:
“The divergence between North American and European confidence this month reflects some of the underlying fundamentals,” added O’Connell. “While there have been some mildly positive data surprises in Europe, there is continued concern about the way forward in addressing the fiscal difficulties of a number of the periphery economies, and this has dulled investor enthusiasm. The improvement in Asian sentiment brings the Index for that region back to its September 2008 level.”
Source: State Street
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.