The investor confidence index (ICI), produced by research house ETM and retirement fund Maxim, rocketed by 32,3 points to 94,6 — a rise of 52% compared with the same quarter of 2008.

That was the highest level for the ICI since the third quarter of 2007, before the global financial crisis struck.

“Improved risk appetite among foreign investors towards emerging markets again had a much stronger influence in boosting the ICI than domestic fund allocation,” the two companies said in a joint press release.

“This is another example of how global monetary stimulus measures have fed investor confidence towards SA while local funds remain circumspect.”

That in turn suggested that the pace of recent gains in the ICI — which descended to a trough of 62,3 in the third and fourth quarters of last year — would struggle to be sustained, they said.

The three main components of the index are asset allocation by local funds, a US volatility index seen as a proxy for risk aversion, and SA’s leading indicator for the business cycle.

The so-called leading indicator jumped 11,6% in November — its biggest rise in more than five years — sending a strong signal that the economy’s recovery is on track.

Compiled by the Reserve Bank with data from surveys, share prices and SA’s trade partners, the composite leading indicator predicts trends in the economy six to 12 months ahead.

ETM and Maxim said the rise in the leading indicator and a fall in the VIX volatility index in the final quarter of last year accounted for about 90% of the increase in the ICI.

There was a risk that the index for that quarter might be revised after the release of the December leading indicator, they said.

SA’s economy pulled out of its first recession since 1992 in the third quarter of last year, but the recovery is being driven by demand for local exports rather than consumer spending, the economy’s main growth engine.