EconoIndicators

Investor Confidence At a Glance
Note: There were large revisions to the June index.

• Global Index: 58.2
• Monthly Change: Down 17.5
• Year-to-year Change: Down 23.8
• North America Index: 50.8
• Monthly Change: Down 24.3
• Europe Index: 79.6
• Monthly Change: Down 1.5
• Asia Index: 86.5
• Monthly Change: Down 0.6

State Street Investor Confidence Index October 2008

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State Street Investor Confidence Index October 2008 Chart

Investor Confidence Index Declines from 75.7 to 58.2 in October

Boston, October 21, 2008 – 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 October 2008.
Global Investor Confidence decreased by 17.5 points to 58.2 from a revised September level of 75.7. Confidence among North American investors fell particularly sharply from a revised level of 75.1 to 50.8. Elsewhere, the declines were less dramatic, with European confidence falling just 1.5 points to 79.6, and Asian confidence declining 0.6 points from 87.1 to 86.5.
Developed through State Street Global Markets’ research partnership, State Street Associates, by Harvard University professor Ken Froot and State Street Associates Director 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 is based on financial theory that assigns precise meaning to changes in investor risk appetite, or the willingness of investors to allocate their portfolios to equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence.
“This month we saw a dramatic and unprecedented decline in investor confidence to a new record low, led by investors in North America,” commented Froot. “We saw broad and important reductions of risk across investor portfolios previously at times like the Asian Crisis in 1997 and the Russian-LTCM crisis in 1998. However, even the strong broad-based selling of risk we saw during those events appears small compared with the current outflows. The combination of financial crisis along with truly global macroeconomic risk of deep recession has been causing a complete re-evaluation of risk across a wide investment community centered on US institutional investors.”
“When you remember that this measure of investor confidence is not a survey, but rather is based on the actual trades of institutional investors, the readings are particularly striking,” added O’Connell. “The period over which this reallocation was measured in investor portfolios, September 17 to October 15, saw the largest single reallocation away from risky assets that we have witnessed in the data since it first became available in 1994.”
October Results
Global 58.2
N. America 50.8
Europe 79.6
Asia-Pacific 86.5

Source: State Street Associates