An analysis of cash holdings over the past 10 years of the 85 largest mining and industrial companies on the JSE found that this group had increased its cash holdings from R154bn in 2007 to R765bn in 2016, Intellidex said after conducting research into cash hoarding. This reflects a compound growth rate of 17.4%. However, some context shows this is not hoarding. As the price of firms’ outputs and inputs increase, so does the cash they need to hold. After adjusting for inflation, cash holdings grew 11% a year. Another factor to consider is the depreciation of the dollar. Most of these 85 companies have significant overseas operations and therefore a lot of their cash is held in hard currency. The market capitalisation of the JSE also grew 250% during the period. Total assets held by the top 85 nonfinancial companies more than quadrupled over the same period. Read the full story here
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