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A Heatmap Of Global CapEx 'Shrinkage'
Hot on the heels of the biggest collapse in Australian Capex ever, and just as we predicted back in 2012, we thought it about time to once again re-visit - Godot-like - the never-ending wait for 'recovery' (or ongoing crash) in Capital Expenditure around the world.
Back in 2012 we accurately predicted that in the Brave New Normal World, where zero cost debt-issuance is used to immediately fund stock buybacks instead of being reinvested in growth and expansion, in the process boosting management pay through equity-performance linked option payout structures, that with every passing year CapEx spending would decline first in relative then in absolute terms, even as free cash flow use of funds is spent on other "here-and-now" shareholder-friendly activities such as buybacks and dividends would grow exponentially.
And yet companies which have no choice but to continue their existence, even if they are forced to pay out all incremental cash to their loud-mouthed shareholders simply because there really is no global economic growth which can soak up the incremental growth spending, they still spend money on (mostly) maintenance and (to a tiny extent) growth capital spending.
So for those curious where this spending ends up (because everyone knows where dividends and buybacks go), here is a global heatmap of all capex spending broken down by region and segment:
As Goldman so succinctly explains, this is not about to turn around anytime soon...
Our long-held bearish view on capex hinges on several overlapping factors:
- the aftermath of China’s huge investment phase and the resultant overcapacity;
- global growth becoming less capital-intensive;
- the ubiquity of technology (substituting hardware capex for software opex, digitisation of widgets, optimising utilising and rousing dormant capacity); and
- persistent uncertainty (around regulation, obsolescence risk and new competitors, both cross-border and cross-sector).
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oil gas and coal, oil gas and coal, oil gas and coal.
that is going to be a mess in a few years
Its probably only coincidental that oil, gas and coal are going to get crushed under the administration who had pledged in his campaigns that he would destroy oil, gas and coal under his administration. Purely a coincidence.
I have to wonder what big oil did to upset the goldman sacs group so much
All great ideologies require a great enemy or opponent. The ideology our country is now blessed is one where it is ourselves who are the enemy. Our consumption of carbon based fuels is a scarlet letter that we all must bear and as such we are all sinners that MUST capitulate to our high priests. This is their basis of power, our surrender of self to the collective as punishment, atonement for our sins, for our successes, for our wealth and power. We have cast off the more traditional religions for the modernity of progressivism, but it doesn't matter as all it is really about is submission to a higher power for whatever excuse as can be rationally contrived and believed by the masses, regardless of how much indoctrination is required. We believe what we believe, not because of modern epiphany, but because of what we have repeatedly been told, again and again, through indoctrination. The religion of progressivism is a learned perception, one as most in the past that relies on its "science", that through tortured methodology "proves" their thesis beyond all doubt. There is nothing new or progressive about progressivism.
who still gets capex?
Ol'timer's around the region talk about a time when you could get the equipment you needed every year.
I think they're spreading fairy tales though.
It's not called Cap Ex any more, today the kids call it QE.
I hope you 'mericans didn't consume too much iodized salt today in your turkey foods stuff. Talk about poison.
Get with the Fed program...
CapEx is not necessary to commit fraud.
… especially when the Government
PAYS you not to be poor !