Concentrated cash pile puts recovery in hands of just a few corporations.

FT: “The pile of unspent corporate cash that has built up since the start of the financial crisis is being held by an increasingly concentrated pool of companies that will be crucial to hopes of a pick-up in business investment to stimulate the world economy.”
“About a third of the world’s biggest non-financial companies are sitting on most of a $2.8tn gross cash pile, according to a study by advisory firm Deloitte, with the polarisation between hoarders and spenders widening since the financial crisis.
This will have a big influence on whether 2014 will bring a revival in capital expenditure or dealmaking, warned Iain Macmillan, head of mergers and acquisitions at Deloitte. “Looking ahead, the wave of cash that many are expecting will depend on the decisions of a few, rather than the many,” he said.
Of the non-financial members of the S&P Global 1200 index, just 32 per cent of companies held 82 per cent of the aggregate cash pile, the highest level since at least 2000. With nearly $150bn in its coffers, Apple alone was sitting on about 5 per of the total at the end of its fiscal year. [Tech has $775.2bn Energy is fifth with $288bn]
Such concentration has increased since 2007 when companies that held more than $2.5bn in cash or “near cash” items – not including debt – accounted for 76 per cent of the aggregate cash pile in 2007.
The study focused on gross cash holdings rather than subtracting their debt in an effort to simplify comparisons over time and identify how much money companies have to hand.
The study comes amid increasing investor calls for companies to step up capital spending. An influential survey of fund managers conducted by Bank of America Merrill Lynch released on Tuesday showed a record 58 per cent of investors polled want companies’ cash piles spent on capex.
A record 67 per cent said companies were “underinvesting” and less than a third of asset managers surveyed want companies to return more money to shareholders – the usual complaint of investors.”
….Recent analysis by Standard & Poor’s has showed how cash hoarding has damped investment. If the ratio of cash held by companies to their assets had followed a more “normalised” recovery path in 2012 and 2013, an extra $900bn of cash would have been spent by the global non-financial corporate sector over those two years.
Cash hoarding is blamed by some economists for some regions’ slow emergence from the crisis. As companies keep operating costs low and do not invest in equipment, their wealth does not trickle down to benefit the wider economy.
FT: Pressure mounts for corporates’ cash piles to be put to work.
“….Deloitte’s analysis of the S&P 1200 and FTSE 100 suggests that cash-rich companies have been underperforming those with relatively small cash piles since 2008, measured either by their quarterly revenue growth or share price performance.
Of the global S&P 1200 non-financial companies, as of the third quarter 2013, technology companies held the most cash ($775bn in total), followed by telecoms, then energy and healthcare.”