Boston– State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), today released the results of the State Street Investor Confidence Index® for May 2010.
Globally, Investor Confidence fell 11.2 points to 88.2 from April's revised reading of 99.4. Declines in sentiment in North America were a key contributor, with institutional investor confidence falling 5.0 points from 103.3 to 98.3. Among European investors, too, confidence was lower, falling 3.5 points from 95.7 to 92.2. In Asia, by contrast, confidence was robust, rising 6.8 points to reach 101.0.
Developed through State Street Global Markets’ research partnership, State Street Associates, by Harvard University professor Ken Froot and State Street Associates Paul O’Connell, the State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher is risk appetite or confidence It is based on actual trades rather than survey data, and as a result it captures the sentiment of institutional investors with unique precision.
“This month we saw institutional investors continue on the course they set last month, leading to substantial cuts in risk allocations,” commented Froot. “As was true at the onset of the sub-prime credit crisis in 2007, institutions were prescient with the cutback in risk that they instituted in March, even as markets continued to rise. The continued de-leveraging that we see this month signals that there is considerable uncertainty around euro-region deficit levels, and their knock-on implications globally.”
"Looking at the underlying data in more depth, it is fair to say that uncertainty around the outcome of the British elections played a role early in this month’s declines, as did the market volatility exhibited by US exchanges on May sixth,” added O’Connell. “The only optimistic note was struck by Asian institutional investors, though here too, investors were selective, favoring commodity-producing countries, but shying away from Europe and the US.”
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About State Street Global Markets
State Street Global Markets provides specialized investment research and trading in foreign exchange, equities, fixed income and derivatives. Its goal is to enhance and preserve portfolio values for asset managers and asset owners. From its unique position at the crossroads of the global markets, it creates and unlocks value for its clients with original flow-based research, innovative portfolio strategies, trade process optimization, and global connectivity across multiple asset classes and markets.
State Street Global Markets’ research team of leading academic and industry experts is committed to continually advancing the science, including theory and application of its proprietary investor behavior research and innovative portfolio & risk management technologies to help its clients challenge conventional thinking, shape ideas, make more informed investment decisions and deliver measurable results.
About the State Street Investor Confidence Index®
The index is released globally at 10 a.m. Eastern time in Boston on the last Tuesday of each month. More information on the State Street Investor Confidence Index is available at http://www.statestreet.com/investorconfidenceindex.
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management, and investment research and trading. With $19 trillion in assets under custody and administration and $1.9 trillion in assets under management at March 31, 2010, State Street operates in 25 countries and more than 100 geographic markets worldwide. For more information, visit State Street at www.statestreet.com.
This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment. Those statements are based on current expectations and involve a number of risks and uncertainties, including those set forth in State Street's 2009 annual report and subsequent SEC filings. State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, May 25, 2010, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.