Global capital expenditure by cash-rich companies still stalling.

FT: “An expected pick-up in global investment spending by cash-rich companies has failed to materialise so far this year. Although companies continue to have historically high levels of gross cash at $4.5tn for the top 2,000 capex spenders in 2013, spending is likely to decline 0.5 per cent this year in real terms, according to Standard & Poor’s forecasts based on first-half data.”
“That would come after a 1 per cent decline in 2013.
“There was a lot of hope that a clear improvement in the economic cycle might trigger the second stage when companies feel more comfortable and start spending their cash,” said Gareth Williams, corporate economist at Standard & Poor’s in London. “For a variety of reasons this isn’t going to happen and it raises questions about the robustness of the recovery this year.”
Capital expenditure by emerging market companies, having fallen 4 per cent year-on-year in 2013, now seems likely to fall by a similar amount this year – the first significant reversal in the long-term uptrend since the various financial market crises of the 1990s.
“The balance [of global capex] has shifted dramatically in the last decade and one of the things that leaps out at you is how many of the biggest capex spenders are based in China, Brazil, Russia and India,” Mr Williams said. “Maybe there is a bigger process of adjustment happening in the emerging markets than is appreciated.”
….Companies in the commodity sectors – which have historically had the highest levels of capex – are also tightening the purse strings. S&P said aggressive cuts to capital expenditure were being implemented by metals and mining companies such as BHP Billiton, Vale and Rio Tinto and there was growing evidence of stalling capital expenditure in the global oil and gas sector from the likes of PetrobrasChevron, Gazprom and Total.
In January, the chief executive of Royal Dutch Shell said capital spending would fall as much as $9bn to $37bn this year. Ben van Beurden said the belt-tightening would be marked by “hard choices on new projects [and] reduced growth investment”.
Energy companies made up nine of the top ten capex spenders globally in 2013, and, with the miners, accounted for 42 per cent of global corporate capex.”