Fund managers and money are flooding back to Asian markets

Photo by Kevin Frayer/Getty Images

Investor confidence has taken a hit in the US and Europe, according to the latest State Street Global Exchange Investor Confidence Index (ICI) for October. That’s dragged the global index down 2.3 points to 114.3.

But while US sentiment fell from 133.2 to 125.5 on October and European sentiment fell another 5.8 points to 89.9, Asian sentiment bounced 13.2 points to 111.

It’s not hard to see why the euro is under pressure again with that result. But the overall reading of 114.3 means global investors are largely still positive, State Street’s Ken Froot said.

But it was the huge jump in Asian investor confidence which stood out given the result was “the first time that the Asia ICI has ascended above the key 100 threshold this year,” Froot said.

He added that signalled a “risk on climate” for the reason.

That’s something that the latest flow of funds report from HSBC supports.

Herald van der Linde, HSBC’s head of equity strategy for the Asia Pacific said in a report that “after four consecutive months of net outflows, FII (foreign institutional investor) flows turned positive as FIIs bought over USD3.3bn worth of Asian equities so far this month (to 23 October 2015)”.

The improvement in investor sentiment toward Asia and the flow of funds back to the region reflects “increasing risk to growth in developed markets rather than any fundamental improvement in the Asian market’s outlook,” van der Linde said.

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