Corporates to Continue Piling Cash

Corporate cash piles in the U.S. will continue to grow as the year ends. Company liquidity will increase roughly 5% to $1.9 trillion at the end of 2017, according to a recent report from Moody’s Investors Service.

Nearly half of corporate cash piles in the U.S. will be held by the technology sector. In fact, the top five cash holders—Apple, Microsoft, Alphabet (Google), Cisco Systems and Oracle—all come from the tech sector. The five companies will hold 35% of the total nonfinancial cash piles this year. Apple alone will have almost 15% ($285 billion) of the total corporate cash pile.

The increase in tech cash piles is due to the sector’s strong cash flow, according to Moody’s Senior Vice President Richard Lane. Offshore cash piles of U.S. nonfinancial corporates will also increase this year. U.S. firms aren’t the only companies focusing on cash.

Several weeks ago, Samsung named a new CFO to manage nearly $70 billion in cash. The electronics company has increased its cash pile 8% in three months. In Japan, over half of the listed companies reached all-time highs in retained earnings, said Nikkei Asian Review. Two of the world’s top automakers led the way. Toyota had more than $160 billion in retained earnings, while Honda was a distant second with over $62 billion in retained earnings. “Critics point to restraint on wage increases and dividends as another factor letting corporate cash pile up,” said Nikkei.

– Michael Miller, editorial associate

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