GLOBAL- Institutional investors confidence in global equity market plummeted to its lowest level since 1999 as they continue to be “sceptical” about the risk outlook, according to this month’s State Street Investor Confidence Index.

The June edition revealed confidence among investors fell to 85.5 points, the lowest level since January and October 1999. The index is an economic indicator for asset owners, investment managers and central banks.

Michael Metcalfe, senior strategist at State Street, said low levels of equity market volatility, credit and emerging market bond spreads might have suggested “a degree of market complacency” to the approaching Federal Open Market Committee meeting on interest rates.

“Financial market prices are not always a good guide to the sentiment of institutional investors and that appears to be particularly true this month,” he said. Metcalfe also attributed the fall in confidence to Alan Greenspan’s warning that the central bank would act rapidly if inflation moved above forecast.

Professor Ken Froot of Harvard University, who together with Paul O’Connell of State Street Associates developed the model, said: “Investors continue to adjust downwardly the risk of their portfolios in the face of prospective monetary tightening.”

O’Connell added the most recently collected data indicated institutions in the majority of markets were selling risky assets.

The State Street Investor Confidence Index is released by State Street Associates, the five-year-old research unit of State Street Global Markets.