Global investor risk appetite falls for 3rd month – survey

Global investor risk appetite has fallen for the third consecutive month in August, according to the latest S&P Global Investment Manager Index (IMI) survey.

The index, which gauges investor sentiment, dropped to a one-year low of -10 per cent this month from -5 per cent in July, marking a significant decline from the two-and-a-half-year high recorded in May.

The survey, conducted between August 6th and 9th, coincided with a period of heightened market volatility. Investors remain pessimistic about the near-term outlook for US equities, with a majority anticipating a decline in the coming month.

Concerns over corporate earnings have also weighed on investor confidence. For the first time since January, equity fundamentals are now perceived as a negative factor for returns, a stark contrast to the positive impact they exerted for 27 months prior.

Following a Q2 earnings season that fell short of expectations, investors have significantly downgraded their outlook for Q3 earnings, reversing the upward revisions seen after Q1.

The deteriorating macroeconomic environment has driven a shift towards defensive stocks. Simultaneously, the prospect of lower interest rates has boosted sectors like utilities and real estate.

Healthcare has emerged as the top-ranked sector in August, followed by utilities at its highest position since the survey’s inception. Consumer staples has also climbed to its highest ranking since January. Conversely, consumer discretionary has fallen to the bottom of the rankings.

Attribution: S&P Global Investment Manager Index (IMI) survey

Subediting: M. S. Salama