State Street Investor Confidence Index® for December 2010

Date: Wednesday, December 29, 2010
Author: State Street Global Markets

State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), today released the results of the State Street Investor Confidence Index^® for December 2010. 

Globally, Investor Confidence rose 8.0 points from November’s revised reading of 96.4 to 104.4. In North America, confidence rose 7.7 points to 103.1 from November’s level of 95.4. However, Investor confidence was not as positive among European investors with the index decreasing 10.8 points to 99 from November’s revised level of 109.8. In Asia, like North America, institutional investors were equally optimistic and confidence in that region increased by 7.4 points from a revised November level of 95.5 to 102.9 in December.

Developed by Harvard University professor Kenneth Froot and Paul O’Connell of State Street Associates, the State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher is risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

“This month the confidence of institutional investors has continued its late-year improvement.  Clearly, the scenario for moderated world growth with recovery in the US has increasingly gained traction,” commented Froot. “Confidence in both North America and Asia has now edged above the neutral level of 100, after a relatively weak mid-2010.”

 “The strong decline of European investors’ confidence shows that the regions’ investors remain quite jittery in the face of intra-European turmoil,” added O’Connell.  “We went quickly from a regime of concern around the euro and the liquidity of some of the smaller countries’ debts, to a regime where those concerns were ignored.  And now we have come full circle:  European investors are back again worrying that high sovereign indebtedness may prove destabilizing for the region.”

About State Street Global Markets

State Street Global Markets provides specialized investment research and trading in foreign exchange, equities, fixed income and derivatives. Its goal is to enhance and preserve portfolio values for asset managers and asset owners. From its unique position at the crossroads of the global markets, it creates and unlocks value for its clients with original flow-based research, innovative portfolio strategies, trade process optimization, and global connectivity across multiple asset classes and markets.

State Street Global Markets’ research team of leading academic and industry experts is committed to continually advancing the science, including theory and application of its proprietary investor behavior research and innovative portfolio & risk management technologies to help its clients challenge conventional thinking, shape ideas, make more informed investment decisions and deliver measurable results.

About the State Street Investor Confidence Index^®

The index is released globally at 10 a.m. Eastern time in Boston on the last Tuesday of each month. More information on the State Street Investor Confidence Index is available at http://www.statestreet.com/investorconfidenceindex. 

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment management, investment research and trading and investment servicing. With $20.2 trillion in assets under custody and administration and $1.9 trillion in assets under management at September 30, 2010, State Street operates in 25 countries and more than 100 geographic markets worldwide. For more information, visit State Street’s website at www.statestreet.com.

This news announcement contains forward-looking statements as defined by United States securities laws, including statements about the financial outlook and business environment.  Those statements are based on current expectations and involve a number of risks and uncertainties, including those set forth in State Street's 2009 annual report and subsequent SEC filings.  State Street encourages investors to read the corporation's annual report, particularly the section on factors that may affect financial results, and its subsequent SEC filings for additional information with respect to any forward-looking statements and prior to making any investment decision. The forward-looking statements contained in this press release speak only as of the date hereof, December 28, 2010, and the company will not undertake efforts to revise those forward-looking statements to reflect events after this date.