Japan Companies Continue to Love Cash

Japanese firms boosted their cash stockpile to a record in the first quarter, underlining challenges Prime Minister Shinzo Abe faces a year and a half into his drive to reflate the economy.

Nonfinancial companies’ holdings of cash and deposits rose 4.1 percent to 232 trillion yen ($2.3 trillion) at the end of March, while they increased borrowing from private banks at the slowest pace since the final quarter of 2012, a Bank of Japan report showed yesterday. Households kept more than half of their assets in cash and deposits.

Firms’ reluctance to plow cash into projects at home increases the urgency for Abe to deliver on promises to boost the growth potential of Japan’s economy with his “third arrow” of Abenomics. With domestic prospects limited, direct investment overseas jumped 21 percent from a year earlier — a 10th straight quarter of double-digit gains.

Bloomberg

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