Global Corporate Capex to rise 13% in 2021, says S&P

July 23, 2021

SINGAPORE -- Companies across the globe are ramping up their spending, with S&P Global Ratings forecasting corporate capital expenditure (capex) to rise 13% for the year. S&P says global capex from nonfinancial companies fell to US$3.3 trillion in 2020 from US$3.5 trillion in 2019, and it is set to rebound to US$3.7 trillion in 2021.

Semiconductors, retail, software, and transportation are increasing capex the most, while commodity capex is likely to remain disciplined.

The report says capex has proved resilient to COVID-19 despite contracting 6% in 2020, as much of this stemmed from sharp commodity capex cuts. Excluding energy and materials, 2020 capex fell just 2%, and it will grow 15% to US$2.8 trillion from US$2.5 trillion in 2020.

Sixteen of 20 industry groups will spend more in 2021 than before the pandemic, S&P says. This resilience reflects the Asia-Pacific region's better handling of the pandemic, the impact of government support, and growth drivers such as digitization and the energy transition.

"The ongoing economic recovery should also keep the capex momentum going, along with powerful policy encouragement for infrastructure and climate-related spending.

"Global shortages of semiconductor chips have also had a significant impact on other industries this year, notably autos and technology hardware, and semiconductor spending should alleviate the shortages.

The companies in S&P Global Ratings' Global Capex 2000 universe have a record US$7.9 trillion of cash on their balance sheets. The top-60 global nonfinancial capex spenders in this universe together invested US$1 trillion over the past year, with energy remaining the most heavily represented sector.

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