- Despite a correction of global stock markets in the recent week, investors’ confidence level has generally improved during the month of June, largely bolstered by the high risk appetite in the US.

- According to State Street Global Markets, Global Investor Confidence Index (ICI) rose 11.9 points to 106.8 in June 2013, from the revised reading of 94.9 in May. Specifically, the ICI in the US rose by 11.4 point to 114.0 (May: 102.6).

- Elsewhere, confidence had also increased among European and Asian institutions. The European’s ICI advanced by 4.7 points to 98.4 (May: 93.7) and the ICI index for Asia rose to 89.1 (May: 86.0).

- Note that the State Street ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

- The index assigns the changes in investor risk appetite. For instance, the greater the percentage of allocation to equities; the higher it is for risk appetite or confidence level. The threshold of 100 divides between the increase and decrease of long-term investment allocations to risky assets.

- Even as prospects of dialling down the QE had caused a spike in bond yields and a sell-off in equities, institutional investors viewed this as an opportunity to add equity risk at the expense of bond holdings.

- Meanwhile, Malaysia continues to strive for sustainable domestic demand. Particularly, the longer-term inflows through FDI could potentially make up for losses in short-term outflows of foreign capital. We are positive on potential inflows of long-term investments and thus we do foresee a pick-up in GDP growth momentum during 2H13.

- Aside from the boost in terms of FDI, we anticipate exports demand to improve mainly backed by the rebound in the US. Latest economic indicators for the US suggest that consumers and companies are reacting positively in anticipation of a lasting broad-base economic expansion ahead. Based on a survey conducted last week, American households were the least pessimistic about the current state of the economy in more than five years.

- Based on a statement yesterday, the Malaysian Investment Development Authority (MIDA) has attracted future investments worth RM2.2bn during its recent mission to Manchester, Dublin, and Paris. Those investments were in various sectors including transportation equipment, information and communication technology, renewable energy, recycling industrial steel waste, maintenance, repair and overhaul activity and education or training.

Source: AmeSecurities