Investor Confidence Index Falls to 78.6 in OctoberState Street Investor Confidence Index
October 18 2005 - 10:00AM
Business Wire
State Street Global Markets, the investment research and trading
arm of State Street Corporation (NYSE:STT), released today the
results of the State Street Investor Confidence Index(R) for
October 2005. Last month, State Street introduced its regional data
for institutional investors in Europe, North America and the
Asia-Pacific region. According to the October index, investor
confidence decreased to 78.6 from September's revised reading of
83.4. Looking regionally at the revised figures, the confidence of
North American institutional investors fell from 99.6 to 93.5, and
that of European investors fell slightly from 70.5 to 69.7. Asian
institutional investors, by contrast, displayed increased
confidence, with the Index for that region rising from 78.8 to
85.2. Developed through State Street Global Markets' research
partnership, State Street Associates (SSA), by Harvard University
professor Ken Froot and SSA Director Paul O'Connell, the State
Street Investor Confidence Index(R) measures investor confidence on
a quantitative basis, analyzing actual buying and selling patterns
of institutional investors. The index is based on financial theory
that assigns precise meaning to changes in investor risk sentiment,
or the willingness of investors to hold proportionally more or less
of their portfolio in equities. The more of their portfolio that
institutional investors are willing to devote to equities, the
greater their risk appetite or confidence. "We see evidence of
renewed weakness in the risk appetite of professional investors
this month," said Froot. "Declines in sentiment stem from the
recovery from natural peril losses in the U.S. and elsewhere,
worries about the continuation of economic growth, and increasing
recognition that the easy money policies of major global central
banks are coming to a close. Floating exchange rates were devised
to allow central banks to follow policies independent of one
another. However, global changes in commodity and real estate
prices have now forced central banks to cut back on liquidity in a
coordinated way." "Our regional breakdown of institutional investor
confidence tells us that North American institutional investors are
taking risk off the table," added O'Connell. "This contrasts with
Asian investors, where confidence showed solid improvement. With
Asian growth propelled by strong increases in productivity,
sentiment is showing far greater resilience in that region. The
pattern in equity flows across countries remains similar to what we
have seen recently, with U.S. and U.K. equities receiving a
particularly weak level of purchases by historical standards."
Since its launch in September of 2003, the State Street Investor
Confidence Index(R) has become a key economic indicator for asset
owners, investment managers and central banks. As the only index
providing a quantitative measure tracking the common buying
patterns of institutional investors around the world, the State
Street Investor Confidence Index(R) offers a unique look into the
investment behavior and decisions of thousands of professional
investors and their investment decisions. 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 are committed to continually
advancing the science, including theory and application of its
proprietary investor behavior research and innovative portfolio
& risk management technologies to helps its clients challenge
conventional thinking, shape ideas, make more informed investment
decisions and deliver measurable results. About the State Street
Investor Confidence Index(R): The index is released globally at 10
a.m. Eastern time in Boston on the second to last Tuesday of each
month. More information on the State Street Investor Confidence
Index, including frequently asked questions and a calendar of
release dates, is available at
http://www.statestreet.com/investorconfidenceindex. The previous
month's calculations for the index are revised to account for
trading activity through the end of the reporting period. About
State Street: State Street Corporation (NYSE: STT) is the world's
leading specialist in providing institutional investors with
investment servicing, investment management and investment research
and trading. With $9.8 trillion in assets under custody and $1.4
trillion in assets under management (as of September 30, 2005),
State Street operates in 25 countries and more than 100 geographic
markets worldwide. For more information, visit State Street's web
site 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
related to the pace at which State Street adds new clients or at
which existing clients use additional services, the value of global
and regional financial markets, the pace of cross-border investment
activity, changes in interest rates, the pace of worldwide economic
growth and rates of inflation, the extent of volatility in currency
markets, consolidations among clients and competitors, State
Street's business mix, the dynamics of markets State Street serves,
and State Street's success at integrating and converting
acquisitions into its business. Other important factors that could
cause actual results to differ materially from those indicated by
any forward-looking statements are set forth in State Street's 2004
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, October 18, 2005, and the
company will not undertake efforts to revise those forward-looking
statements to reflect events after this date.
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