Australian companies are continuing to hold more money in liquid cash and deposits than ever before.
- Just under half of financial assets at private sector companies are held in cash or deposits, while households are holding just over a quarter of their assets in cash and deposits.
- The high level of liquid assets is both positive and negative. Companies are well able to deal with the challenges posed by the volatile global financial conditions. But at what point does the level of cash become too much? It is easy to hold funds in liquid form of cash and deposits, but shareholders also want companies to be exploring opportunities to increase efficiency, productivity or growing organically or by acquisition.
- Australian consumers and superannuation funds are also maintaining extraordinarily high holdings of cash and deposits. In fact super funds are holding almost double the “normal” cash holdings with the proportion of assets sitting just over 14 per cent.
To read the full report from CommSec, click here.