A Citi corporate banking survey carried out between July and August that included 260 Asia Pacific corporate bank clients showed that more than 90% have more liquidity than before the pandemic. Many of these clients are now actively evaluating their options to deploy this excess liquidity.
Corporate cash balances of Asia Pacific companies in the MSCI AC World Index now top US$4 trillion, the most on record according to public data.
Among sectors, the growth in cash balances is particularly pronounced in the Industrials, Tech and Hardware sectors in the region.
Many regional corporates have also raised cost effective financing in the last 24 months to support and strengthen their balance sheets.
This cash is now set to be deployed.
As the recovery in global economic growth progresses, companies in region are projected to generate close to US$4.5 trillion in the next two years based on consensus estimates and industry data.
In their responses to where this investment would flow, almost three quarters sighted investment growth as the highest priority, with nearly half focused on de-leveraging. ESG investment continues to show an upward trend at one third with one quarter returning cash back for shareholder redistribution.
Most surveyed firms see ESG as an increasing focus area for their growth strategy. About half of surveyed firms even prioritize ESG investment over increasing shareholder distributions. Those that have also made a net-zero pledge have experienced more share price appreciation and market receptivity to their ESG strategy
Citi is working with many of these corporates to support their sustainability drive across many areas.
"The scope of our sustainable effort is growing continuously and covers all client segments—from investors repositioning their portfolios toward greener industries, to corporates realigning their business models through acquisitions and divestitures. Our institutional commitment to building a greener future cuts across all these activities," said Kaleem Rizvi, Citi's Head of Asia Pacific Corporate Bank.
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Citi Corporate Affairs, Asia Pacific