The global Investor Confidence Index (ICI) decreased to 110.5, a drop of 3.6 points from October’s revised reading of 114.1, led by North American ICI, which dropped 5.3 points to 108.7.
Asian ICI was up a more modest 4.8 points to 108.1, and European ICI ticked down 1.4 points to 95.3.
Commenting on the latest movements in confidence, Marvin Loh, global macro strategist at State Street Global Markets said that despite easing off the strong levels recorded last month, investor sentiment remained near its three-year high in November.
“The overall positive tone in risk assets pushed global equity bourses to multi-year highs, led by North America, with US equity investors looking past the start of Fed tapering, higher inflation readings and more aggressive rate hike expectations.
“Investors’ willingness to look through surging inflation will be key to maintaining the overall investor confidence that has emerged globally this year,” said Mr Loh.
Earlier this week, AMP Capital chief economist Dr Shane Oliver identified a number of COVID impacts that may continue to weigh down investors in the medium to long term.
“The magnitude of the coronavirus shock means it will have implications beyond those associated with its short-term economic disruption,” he said.
“Possibly a bit like a world war – where the post war period is very different to the pre-war period.”
The biggest risk, however, is high inflation.
“Just as World War II and expansionary post-war policy ultimately broke the back of 1930s deflation, so too the pandemic and its monetary and fiscal response is likely to have broken the back of the prior disinflationary period,” said Dr Oliver.
“This in turn means the tailwind of falling inflation and interest rates which provided a positive reflation and revaluation boost to growth assets is likely behind us.”
