The improvement of sentiment was driven by an 18.5 point rise in the European ICI to 107.6.
Meanwhile, the North American ICI further declined from 73.5 to 71.8, and the Asian ICI decreased from 89.3 to 87.4.
The ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. A neutral reading of 100 is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.
“Global investor confidence rebounded modestly in September as central banks everywhere stepped up their efforts to provide accommodations and hopes of a trade truce rose again,” says Michael Metcalfe, senior managing director and head of Global Macro Strategy, SSGM.
However, he warns that “this is nothing to get too excited about just yet”.
“The index is still only marginally above where it began 2019 and remains significantly below the all-important 100 level, which would be consistent with investors adding to their risky asset holdings.” Metcalfe explains. “Investors remain cautious, but marginally less so this month.”
Kenneth Froot, a co-developer of the ICI, attributes the European uptick in investor confidence largely to reallocation toward the UK.
“Professional managers seem to believe that the FTSE, [which had fallen 10 percent since July back to pre-Brexit-vote levels in 2015] is a buying opportunity and a temporary one at that,” he says. “These flows and price fluctuations are understandably volatile given the ongoing updates on the probability of an ill-prepared no-deal Brexit.”
