Global investor confidence rises in February

Investor confidence is rising, according to the results of the State Street Investor Confidence Index for February 2009.

The index measures investors' confidence on a quantitative basis. It analyses the actual buying and selling patterns of institutional investors.

The index found global investor confidence increased by 12.7 points to 72.9 from January's level of 60.2. The increase was mainly driven by North American institutional investors, whose confidence climbed 13 points to 64.5.

There is evidence that institutional investors appear to have "left behind the extreme gloom that characterised their outlook towards the end of 2008," concluded the report.

However, there investors outside North America are not so confident. The European index declined 3.2 points to 69.8 and a decline in the Asian index was down 2.7 points to 83.8.

Despite the recovery in the confidence of North American investors, the index is 15 points below the average of 80.2 recorded for the first nine months of 2008.

The index is based on the theory that assigns changes in investor risk appetite or the willingness of investors to allocate their portfolio to equities. The theory is also based on the fact that institutional investors have a greater risk appetite and confidence if they are willing to invest in equities.

The index is produced by Harvard University and State Street Associates, the research partner of State Street Global Markets.