The State Street Investor Confidence Index has risen by 18.6 points from December’s reading of 95.8 to 114.4 this month, off the back of a surge in investor confidence globally.
The Investor Confidence Index, developed by State Street Global Exchange and Harvard professor Kenneth Froot, measures investor confidence by analysing the actual buying and selling trends of institutional investors.
According to State Street, a greater percentage allocation to equities raises the index reading, while a reduction in long-term allocations to risky assets lowers it.
The rise over January was the greatest in the past four years, according to State Street Global Exchange, and was mainly due to the rapid rise in North American sentiment from 92.1 to 113.6.
An increase in European sentiment from 107.5 to 112.6 also helped to improved global investor confidence, along with an increase in Asian sentiment from 97.7 in December to 103.5 this month.
This is the second month in a row that the index has improved, after experiencing declines in both October and November.
State Street Global Exchange's senior managing director and head of research and advisory services, Jessica Donohue, said she believes the reduction in US policy uncertainty and optimism about the Federal Reserve’s policy of forward guidance may subsequently help “anchor low interest rates”.
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