US businesses continued to be cautious about the economy and responded by building cash and short-term investment holdings at a rapid pace during Q4 2019, said the Association for Financial Professionals.
According to the AFP, its Corporate Cash Indicators, (CCI) — a quarterly survey of senior corporate treasury and finance executives conducted by the organisation — increased 22 points to +31, and the year-over-year indicator increased by thirteen points to +33, which is the highest rate of cash accumulation since the inception of the CCI in 2011.
These results are based on 143 responses from senior treasury and finance professionals this quarter, AFP said.
Early in Q4, organisations signalled they would build cash reserves significantly through the quarter, AFP pointed out.
Not only did they keep their word, but they increased their holdings at a higher rate than planned. However, going into the new year, financial professionals are displaying some optimism and report they will be deploying cash in the first few months of the year, the organization added.
The forward-looking indicator measuring expectations for changes in cash holdings in the current quarter decreased 19 points from a reading of +16 to -3, AFP noted.
Meanwhile, the CCI measure for short-term investment aggressiveness increased significantly, moving from -10 to -1 during the last quarter of 2019, still signaling a more conservative posture with cash and short-term investments, AFP said.