If the value of the index is positive, optimism dominates. If the value is negative, the words considered negative in management communication dominate.
How does the index relate to financial markets?
An empirical analysis of the data from 2003 to 2024 for Germany shows that an increase in manager sentiment by one (standardized) unit is on average associated with 5.7 percent points lower stock market returns over the next 12 months. Note: This is an average value and should not be understood as a forecast.
The SAFE White Paper N0. 109 covers more details about the methodology in the “Information & Downloads” section.