State Street Global Exchange’s Investor Confidence Index (ICI) for May fell to 106.6, down 2.0 points from April’s revised reading of 108.6. The decline in sentiment was driven by a decrease in the North American ICI from 114 to 109, it says. By contrast, the Asian ICI increased by 4.1 points to 112.1 while the European ICI rose from 95.4 to 96.8.
The Investor Confidence Index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. It assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.
A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.