Global institutional investor confidence has continued to creep upward after falling to its lowest levels in late 2012, data from State Street Global Markets have revealed.
The State Street Global Investor Confidence Index (ICI), which measures investors' risk appetite based on their percentage allocation to equities, slumped to its lowest recorded levels late last year.
But the ICI showed a slight upturn in December to a revised reading of 81.4 from the November low of 80.5, before climbing 5.4 points to reach 86.8 in January.
The increase was driven by North American institutions, whose confidence rose 7.8 points from December's revised level of 78.5 to reach 86.3.
The Asian ICI rose 3.9 points from 87.1 in December to 91.0 in January, but risk appetite among European institutional investors continued its decline, falling 4.5 points from a December's revised 94.1 to 89.6.
"2013 has opened with something of a turnaround in demand for global equities by institutional investors," said index co-developer Kenneth Froot of Harvard University.
"This comes on the heels of a two-and-a-half year period of persistent 'de-risking' by these institutions. We will be watching the data closely to see if this is a short-term deviation from trend, as we saw in mid-2012, or whether it signals a more concerted effort to rebuild core equity positions," Mr Froot said.
Paul O'Connell of State Street Associates said the disparities in confidence across regions had continued to dissipate.
"There is now more global consensus on the appropriate stance to take towards risky assets. It remains the case that all three regional indices are below the long-term neutral level of 100, but our underlying data reveal consistent recent buying of equities in the US, Japan, Europe (excluding the UK) and emerging markets," Mr O'Connell said.
