Ben Marlow and Ashley Armstrong note that the world’s corporate giants are poised to tap into record cash reserves. Hopes are rising for a massive boost to the global economic recovery.
As the economic recovery gets under way and factories begin to operate at full capacity, investors are growing increasingly frustrated at more than half a decade of prudence, pushing chief executives to loosen the purse strings, experts believe.
“Capital spending could increase as early indicators show that industrial companies are beginning to run at higher levels of capacity than has been the case over the last five years,” Dennis Jose, senior global and European equity strategist at Barclays, said. “When factories and the like are running at less capacity on the back of lower demand there is very low capital expenditure.”
In the aftermath of the financial crisis companies hunkered down and re-engineered their balance sheets, diverting funds from investment to pay off debt or stockpile cash. However, even since the recession ended and the economy has picked up, many have continued to hoard cash leading to growing calls from investors to deploy cash reserves, which earns low returns sitting on balance sheets. Governments too are calling for a loosening of the purse strings to help propel the economic recovery, which is showing signs of stalling in many parts of Europe. Will 7 Trillion in Cash Reserves Be Invested
