Ever since the start of the global financial crisis in 2007, financial investors have remained tense as they experienced various shocks and uncertainties caused by low oil prices, the anticipated reversal of US monetary expansion (causing shifting capital flows) and turbulence within the Euro Area. As investor sentiment plays a critical role in driving market movements especially in times of volatility, increased attention has been placed on data which reflect the economic expectations of financial market participants – the Sentix Economic Indicator being one of these.

The Sentix index is a monthly survey of more than 4,000 private and institutional financial market investors on their assessment of the current economic situation and their expectations over the next six months. The index has a worldwide coverage and the results are published based on six economic areas, namely the European Union, Eastern Europe, US, Japan, Asia excluding Japan and Latin America. A global aggregate is derived as a weighted average of these six categories and weights are based on the relative shares of global GDP. The indices can fluctuate from -100 (meaning very bad or strongly deteriorating) to +100 (very good or strongly improving).

The Sentix index covers both private and institutional financial market participants and each receives equal weights in the formation of the overall index. Apart from the assessment of overall economic activity, the index also provides data on the sentiment of financial investors towards initial public offerings (IPOs), commodity and real estate markets, thus extending the scope of the index to provide sentiment towards specific market segments. The Sentix index is considered as the main source identifying the expectations and current sentiment of financial market participants, therefore providing analysts and policymakers with useful insights of, and importantly trends in, investment preferences.

The latest Sentix world index covering July 2015 shows deteriorating economic sentiment in all three sub-components with the average of the current situation and expectations decreasing by 2.8% on a monthly basis, to reach 14.2 points. The value is still above zero, suggesting that the majority of investors surveyed remain positive concerning the world economic situation. The drop in the overall index was mostly driven by a 3.1-point plunge in the six-month expectation index from May to July, reflecting increased pessimism among investors regarding the future. This is not surprising, given the exacerbation of the unstable situation in Greece which increased the level of uncertainty among financial market participants. The IPO barometer index measuring the sentiment among investors towards global IPO activity plunged to -26 points, falling by 23.8% on a monthly basis and by 15.6% compared to June 2014. Among others, the commodity barometer and the real estate sentiment indices also decreased in June 2015. The most pronounced drop was recorded in the commodity index falling substantially from zero points in May to -8.5 points in June. All major world indices suggest increased pessimism among investors and the uncertainty they face.