State Street’s latest Global Investor Confidence Index was released on 26 April 2023. Photo: Shutterstock

State Street’s latest Global Investor Confidence Index was released on 26 April 2023. Photo: Shutterstock

A key institutional investor confidence index inched up in April 2023.

Institutional investors globally were more optimistic this month, largely to improved sentiment in North America, according to a leading indicator of market conditions, State Street’s Global Investor Confidence Index. Nevertheless, North America posted the weakest regional score. European and Asian investor confidence levels both slid slightly. 

The April 2023 global index was 83.5 points, compared to 81.3 in March 2023, 77.6 in February 2023 and 92.3 in April 2022.

A score above 100 indicates positive institutional investor sentiment and below 100 signals a negative view.

European institutional investors have had the highest confidence levels since November 2022, with North American investors indicating the lowest regional sentiment for the past five months.

The regional index for Europe was 111.2 points in April 2023, compared to 117.6 in March 2023 and 76.2 in April 2022. North America was up month-on-month from 73.9 to 75.5, while the figure for Asia-Pacific slipped from 91.9 to 89.3.

“Despite relative stability in the US banking sector, institutional investors globally remained cautious in April as the Global ICI stayed well below neutral with a reading of 83.5,” Marvin Loh, senior global macro strategist at State Street Global Markets, on Wednesday. European institutional investors “[signalled] the strongest level of risk taking,” while “sentiment in Asia slipped again,” Loh said, “on fading optimism of widespread gains from the reopening of the Chinese economy.”

According to State Street: “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.”

State Street has a large business as a bank for institutional investors, with $37.6trn in assets under custody or administration. Its own fund business has €3.6trn in assets under management, as of 31 March 2023. The firm employs 43,000 staff globally, including roughly 1,000 in Luxembourg.