Asian cos cash reserves pegged at $232 bn in mid-2010

Cash reserves of Asian corporates swelled to $232 billion in the first half of 2010, with India's Reliance Industries and NTPC accounting for 4.6 per cent of the total wealth, says a new Moody's report.

As per the ratings agency's report, corporates in the Asian region (excluding Australia and Japan) have seen their aggregate cash balance -- comprising cash, cash equivalents, deposits and short-term investments -- grow by almost 60 per cent since end-2008.

The total cash reserves of Asian corporates touched $231.6 billion in mid-2010, up from $194 billion at the end of 2009 and $145 billion at the end of 2008, it added.

However, the Moody's report did not take the reserves of financial companies into consideration, in which case the total cash reserves figure would have been much higher.

Interestingly, US corporates had cumulative cash holdings of about $1 trillion by mid-2010, over four times more than Asian corporates, but the average cash balance of Asian corporates was almost double that of US companies, the report noted.

The Asian firms have been buttressing their cash positions to cover annual capital spending, dividend and short-term debt requirements. In addition, these cash holdings will help future expansion and acquisition activities.

The cash is concentrated in the hands of the regions premium corporates, with the top 15 which accounting for about 60 per cent of the total.

Among the two Indian firms featuring on the Top 15 list, RIL had liquid funds worth $6.5 billion, while NTPC had $4.2 billion in cash.

The list of Asia's Top 15 non-financial corporates is topped by the Hong Kong's China Mobile, which accounts for 20.2 per cent of the total wealth, with cash reserves of $46.8 billion.

"The balance sheets of Asian corporates are in good shape and the speedy recovery of the Asian economies, coupled with a temporary halt in expansion spending, has allowed companies to accumulate cash over the last 12-18 months," Moody's Vice-President and Senior Credit Officer Elizabeth Allen said.

Allen further said the cash holdings of big companies surged 'mainly on improved operating performances and additional debt raising.'

In terms of countries, China (45 per cent) emerged as the top contributor to the overall cash balance of Asian corporates, followed by South Korea (20 per cent), Singapore (12 per cent) and India (11 per cent), while telecom, technology and energy firms emerged as the most cash-rich companies in the region.

The report is based on an analysis of 121 private and listed companies in Asia and about 1,200 firms in the US that have disclosed their interim financial positions.