Mubasher: The Association for Financial Professionals’ (AFP) Corporate Cash Indicators index (CCI) recorded changes in cash and short-term investments over the past quarter, reaching its highest level since it debuted in January 2011.
This is signaling that corporate treasury and finance executives are increasingly concerned about the global economy and are stockpiling cash reserves in response, according to a report issued Monday.
The latest CCI, a quarterly survey of corporate treasury and finance executives conducted by the Association for Financial Professionals (AFP), American businesses accumulated cash and short-term investments holdings at a breakneck pace in the third quarter of 2017.
A nine-point surge was recorded compared to the previous quarter, as the index exceeded the level of 25 points, while the year-on-year indicator increased two points to more than 20.
Respondents to the previous CCI had indicated they would accumulate cash in Q3-17, but they actually did so at a much higher rate than anticipated, the report indicated.
Key Findings
The index report highlighted that 42% of organizations held larger cash and short-term investment balances at the end of Q3-17 than they did at the end of the prior quarter.
Secondly, 31% of organizations anticipate expanding cash and short-term investment balances over the next three-month period.
Meanwhile, 9% of organizations were more aggressive with their short-term investments in Q3-17.
The president of AFP Jim Kaitz said that “treasury and finance executives are clearly concerned over uncertainty in the domestic and global economy. In response, they are performing their primary role as safe-keeper of corporate cash, keeping their powder dry until they see a more optimistic economic landscape.”
Concerns are rising regarding the ongoing investigation on the Russian interference in the 2016 United States elections, as special counsel Robert Mueller is pressing charges against former aides to President Donald Trump, including his former National Security Adviser Michael Flynn, who previously admitted lying to the US Congress regarding his ties to Russia before to the elections.
In the meantime, Trump’s former campaign manager, Paul Manafort was indicted by a federal grand jury on Monday.
Manafort is facing 12 charges including conspiracy against the United States, conspiracy to launder money, being an unregistered agent of a foreign principal, making false and misleading statements and seven counts of failure to file reports of foreign banks and financial accounts.
