U.S. investors’ confidence slipped
this month, according to an index by a unit of Boston-based State
Street Corp., as they waited for evidence of a pickup in global
economic growth and signs of how government policy may affect
currencies.
The monthly State Street Investor Confidence Index declined
to 103.4 from 103.6 in September, the company said in a
statement. The index measures institutional investors’
willingness to take risk by tracking their stock-buying patterns.
It’s compiled by State Street Associates, a research group
founded by the bank in 1999.
“We don’t see (investors) adding substantially to their
risk portfolios right now,” said Ken Froot, a senior partner at
State Street Associates and a professor at Harvard Business
School. “Investors are waiting to see the data. There is concern
globally what exchange-rate realignments will mean for growth.”
Stocks Monday had their biggest drop in almost seven
weeks after Group of Seven finance ministers signaled they were
prepared to let the U.S. currency fall. That triggered a slump in the dollar and raised concern that international investors may
shun U.S. assets, which drop in value in foreign-currency terms
as the dollar declines.
On Tuesday, the dollar reached its lowest level in almost
three years against the Japanese yen.
Even with this month’s decline, investor confidence still
has gained significantly this year, and in particular after the
United States said in May that its major military operations with Iraq had
ended, Froot and State Street Associates Director Paul O’Connell
said.
The company’s index reached a low in December, and then
started to steadily rise this year, O’Connell said. In 2000, the
index averaged 100, he said.
The fact that September’s decline was small “shows that
we’re not facing any sudden drop in confidence, and therefore
some kind of bottom immediately falling out of equity prices,”
Froot said. Stock prices “have some durability.”
Confidence and stock prices don’t always rise and fall in tandem, State Street said.
Bloomberg News
