SINGAPORE (Dec 27): Global investor confidence has declined for the fifth straight month in December despite increasing optimism on the broader economic outlook, according to State Street Corporation.

The State Street Investor Confidence Index (ICI) for December saw global investor confidence fall to 94.8, down 1.5 points from November’s revised reading of 96.3.

The decline was led by a 6.2 point drop in the North American ICI to 94.9 and a 2.8 point fall in the Asian ICI to 94.8.

The index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. A neutral reading of 100 indicates a level where investors are neither increasing nor decreasing their long-term allocations to risky assets.

“After peaking in July this year, investor confidence has now fallen for five consecutive months; the last three of which have seen investors reduce their holdings of risky assets (an index reading below 100),” says Michael Metcalfe, senior managing director and head of Global Macro Strategy, State Street Global Markets.

“While the broader economic outlook appears increasingly rosy, as captured by measures of consumer and business confidence, the more cautious nature of investors hints at a concern that financial markets may have already discounted much of the good news,” he adds.

Meanwhile, European ICI surged 16 points to 96.9 in December on the back of healthy growth and continued ECB asset purchases.

“Although the index remains below 100, it seems that European-based investors are becoming less concerned that political risks could derail the strong economic performance across the region,” says Kenneth Froot, co-developer of the Investor Confidence Index at State Street Associates.