State Street’s index measures investors’ willingness to allocate more to risky assets, and European investors are now remarkably less willing to do so than their peers in the rest of the world. While the ICI-score for Europe decreased from 103.4 in January to 90.2 in February, which is the largest one-month drop in 16 months, the readings for North America and Asia are 109.3 and 111.9 respectively.
As a result of the European bearishness, the overall ICI-score decreased by 2.2 points to 106.5. Though this still suggests a general intent to increase exposure to risky assets, it is the lowest reading since December 2013.
It’s anyone’s guess why European investors are so much more bearish than their colleagues elsewhere, but it might have to do something with the ECB not doing enough to prop up the faltering European economy, believes Michael Metcalfe, head of Global Macro Strategy at State Street Global Markets. “With banking and government credit spreads under pressure once again, this decline in European confidence highlights the pressing need for additional policy measures in the region,” he said.