LONDON -- Confidence among global institutional investors rose in August despite sharp volatility on financial markets, State Street said on Tuesday, suggesting that big players have been buying as share prices have fallen.
The U.S. financial services firm said its global State
Street Investor Confidence Index, based on data taken until
mid-August, rose to 99.3 from a downwardly revised 86.3 in July,
previously reported as 87.0.
A rise in the index generally indicates that investors have
been picking up riskier assets such as stocks rather than safer
ones such as bonds.
It comes, however, despite a tumble on world stock markets
caused by fears of a credit crunch promoted by losses in the
U.S. mortgage sector. MSCI's main world stock index
has fallen nearly 8 percent since State Street's
last confidence report.
State Street said this was not as illogical as it might seem
as State Street data is based on moves made by institutional
investors. "Many market participants sold heavily," said Harvard
University Professor Ken Froot, a co-developer of the index,
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"but institutional investors were not among them.
"Instead, they took the other side of the trade, and
accumulated assets at relatively attractive price levels across
a broad cross-section of markets."
The data showed that north American investors had been
particularly active, being net sellers in early July but
steadily buying after July 23.
State Street's North American regional index rose to 116.5
from a downwardly revised 95.5, previously reported as 95.8. The
European index dropped to 86.4 from 90.4. Asian investor
confidence rose to 84.1 from 83.5.
The indexes are based on actual buying and selling of assets
within the $13 trillion State Street holds as custodian for
institutional investor clients. The firm also has $1.9 trillion
in assets under management.
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