A capital expenditure boom could help restore economic health
24th JUN. 2021
The Times features ASR on Cap Ex: “ (4) good reasons to believe the post-pandemic economy will be different from the “capital-light” world that came before”
Simon Nixon writes, “According to a new report by Ian Harnett and David Bowers of Absolute Strategy Research (ASR), the global economy is undergoing a “regime change”, in which the incentives may be about to shift in favour of higher levels of capital expenditure… this shift towards much higher levels of capex is likely to persist in the medium and long term, ASR reckons.”
The shift towards capex heavy business models will initially be driven by sectors starved of capital over the last 20 years, thanks to 1. reshoring 2. infrastructure spend. Longer-term it could be 3. nascent technologies required for climate transition and 4. to secure geopolitical leadership that deliver increased returns to investors from ‘capital heavy’ companies.
To read Simon Nixon’s column in full, see HERE (Times subscription may be required)
For a copy of the ASR research note, Equities 2025: investing in capex - heavy businesses :