Investor Confidence Index Declines to 83.1 in AugustState Street Investor Confidence Index: August 2006
August 22 2006 - 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 August
2006. According to the August index, investor confidence decreased
very slightly, by 0.2 points, to 83.1 from July's revised reading
of 83.3. Looking regionally, the confidence of North American
institutional investors fell from 98.1 to 95.2. The confidence of
Asian investors increased to 86.5 from 81.1, and the confidence of
European investors increased to 88.4 from 85.4. 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(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. "With Bernanke's pause
in interest rate increases has come a rally in stock prices
worldwide," commented Froot. "In anticipation of that, over the
last five months we have seen strong increases in our measure of
risk appetite based on the portfolio decisions of more than ten
thousand professional investors in the marketplace. However, most
recently, investors have taken portfolio risk no further. They
positioned themselves for the rally now taking place, and may well
begin to take risk off once that happens." "In fact, U.S. investors
seem to have cut back on the high levels of risk in their portfolio
over the last two months, after substantial increases earlier in
2006," commented O'Connell. Their exposure to the U.S. market, in
particular, has risen with prices over the last two months. Asian
and European investors, by contrast, have a smaller allocation to
U.S. stocks, but are nevertheless increasing their exposures there.
This is partly a sign of optimism about the need for fewer interest
rate increases by the Fed, and partly a sign of their concerns:
economic and geo-political with other markets in view of the
developments in the Middle East." (See Chart) 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 is committed to continually advancing the science,
including theory and application of its proprietary investor
behavior research and innovative portfolio & risk management
technologies to help 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 services. With $10.9 trillion in assets under custody
and $1.5 trillion in assets under management at June 30, 2006,
State Street operates in 26 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 2005
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, August 22, 2006, and the
company will not undertake efforts to revise those forward-looking
statements to reflect events after this date.
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