State Street has released new figures which show an increase in the State Street Investor Confidence Index for September 2011. The September reading indicates a slight increase to 89.9, up from August’s revised level of 88.1.

State Street attributed this global increase to changes in the European and Asian investor confidence indexes. A rise of 5.6 points in the European Investor Confidence Index took it to 95.7, whilst the Asian Investor Confidence Index rose to 100.7 – up 5.5 points. North American investors, however, have shown a slight decline in sentiment from 86.2 in August to 85.1 in September, a difference of 1.1 points.

The State Street Investor Confidence Index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their allocations to risky assets.

“On the face of it, it may seem surprising to measure an increase in Global Investor Confidence in a month in which equity volatility has increased substantially,” commented Kenneth Froot, co-creator of the index. “There are two points that should be kept in mind about the increase. First, confidence remains in the eighties, a relatively low level, albeit better than the low eighties observed in late 2008. Second, despite all of the concern surrounding sovereign balance sheets, corporate balance sheets remain in relatively good shape at present, and this is an attractive feature of equities for institutional investors.”

Despite confidence among institutional investors in Asia rising above the neutral 100 level, Froot said: “It remains to be seen whether the stress emanating from the Euro-region will impact real activity globally to the point where investors find equities unattractive, however we are not presently observing the level of ‘de-risking’ that took place in 2008-2009.”