At Close of 2010, Institutional Investor Confidence Rises

(January 3, 2011) – A key indicator of institutional investor confidence rose significantly in the final month of 2010.

According to a release from State Street Global Markets (SSGM), global institutional confidence rose 8 points month-over-month, with the reading of 104.4 breaking the neutral 100 ranking on the State Street Investor Confidence Index scale. Geographically, results include:

·      European institutional investor confidence, which was at 99 in November, jumped to 109.8;

·      North American confidence, 95.4 in November, rose to 103.1;

·      Asian confidence, at 95.5 in November, rose to 102.9 for December.

“This month the confidence of institutional investors has continued its late-year improvement. Clearly, the scenario for moderated world growth with recovery in the US has increasingly gained traction,” Kenneth Froot, a co-creator of the index, said in a press release.. “Confidence in both North America and Asia has now edged above the neutral level of 100, after a relatively weak mid-2010.”

The SSGM scale, developed jointly with Harvard University professor Froot and State Street, is a quantitative measure that uses buying and selling patterns of institutional investors to determine confidence levels. According to the firm, the index equates larger equity allocations with higher risk appetites, or confidence. At 100 points, investor allocation to equities is static.