Investor Confidence Index Declines Modestly in July
Investor Confidence Index Declines Modestly in JulyJuly 2004 (Newstream) -- State Street Associates, the research unit of State Street Global Markets, released on July 20 the results of the State Street Investor Confidence IndexSM for July 2004. State Street Global Markets is the investment research and trading arm of State Street Corporation (NYSE: STT).
According to the July index, investor confidence declined by 1.2 points to 84.3 from June's revised reading of 85.5.
The index was developed by Harvard University professor Ken Froot and Paul O'Connell of State Street Associates to measure the risk appetite of institutional investors. This month the index shows a modest decline, but it is the sixth decline this year, reflecting a strong change in sentiment since the end of 2003. The reading indicates that institutional investors reduced the overall risk of their portfolios by systematically cutting average equity positions when measured in proportion to their holdings.
"It's becoming clear that investors do not see sufficient growth in earnings to justify recent price levels, especially in the context of increasing interest rates," said Froot. "This decrease is driven by a decline in investor sentiment, but U.S. equities are clearly leading the way."
"0'Connell added that the U.S. Telecommunications sectors seem to be taking the brunt of the decline in confidence, with relatively large and sustained recent outflows. "The high hopes that the second half of 2004 was the beginning of yet another sustained bull market are now all but gone," he stated.
The State Street Investor Confidence IndexSM is 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 IndexSM offers a unique look into the investment behavior and decisions of thousands of professional investors and their investment decisions.
About State Street Associates
Founded in 1999 in Cambridge, Mass., State Street Associates develops portfolio and flow research, currency management, asset allocation services and designs strategy tools to support the needs of global portfolio managers.
About the State Street Investor Confidence IndexSM
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, and the 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.
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