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Investor confidence fell globally, driven by a drop in North American investor confidence, according to the State Street Investor Confidence Index released Tuesday. The global index for September fell to 80.8, 2.7 points below the August level. The North America index fell from 96.0 to 92.8, the Asian index increased to 90.6 from 86.6 and the European index increased from 88.4 to 89.1.

The index is «a quantitative measure tracking the common buying patterns of institutional investors around the world» and assesses investor confidence based on the riskiness of institutional portfolios.

investor confidence,investor sentiment,State Street

Investor Confidence Index Declines to 80.8 in September: September 19, 2006

Boston, September 19, 2006 ‫ 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® for September 2006.

According to the September index, investor confidence decreased by 2.7, to 80.8 from August's revised reading of 83.5. Looking regionally, the confidence of North American institutional investors fell from 96.0 to 92.8. The confidence of Asian investors increased to 90.6 from 86.6, and the confidence of European investors rose from 88.4 to 89.1.

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, 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.

«Investors are trying to balance news of a slowing property market and weaker inventories against the fall in commodity prices and its likely consequences for consumer spending,» said Froot. «The net result is a continuation in the global downward trend in risk appetite that began in June, but with some regional differences. European investors remain cautiously optimistic, and Asian investor confidence reached a 19-month high.»

«Consistent with a diminished appetite for risk-taking, coupled with a more favorable environment for consumers, global investors have recently favored defensive sectors ‫ consumer staples, telecoms and utilities,» added O'Connell. «This has been especially the case amongst U.S. investors.»

Since its launch in September of 2003, the State Street Investor Confidence Index® 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® offers a unique look into the investment behavior and decisions of thousands of professional investors and their investment decisions.