Asia firms spend less and save more as China economy slows - Reuters

According to the latest Reuters analysis of Refinitiv data, the Asian business firms’ spending is likely fall for the first time in three years amid Chinese economic slowdown concerns, in the face of the US-Sino trade uncertainty.

Key Findings:

“Capital expenditure (capex) at 2,137 Asian companies is likely to slip an average 4 percent this year, according to the data, which is based on analyst estimates. The pace of revenue growth is likely to be flat at 3.3 percent, the data showed.

By comparison, capex - or money spent on maintenance and investment - at the same firms grew nearly 8 percent last year.

Real estate companies and those that depend on government infrastructure spending will likely be most frugal, the data showed, while technology firms allocate less on upgrading equipment as global demand for smartphones falters.

Capex is likely to be lower than last year by 7 percent at industrial materials suppliers and 9 percent at tech firms.

On the flip side, falling capex is likely to raise Asian firms’ median cash flow position to its highest in at least five years, at $1.80 per share versus $1.30 last year. Companies with high cash reserves are, for instance, attractive to investors seeking steady dividends in times of economic turmoil.”