Economics
European Companies Have Cash But Won't Spend It
- Estimates for capex are slumping, even as the ECB expanded QE
- Market reacts more positively to buybacks, high cash levels
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Analysts are growing skeptical of Mario Draghi’s efforts to prod companies to spend on growth.
They’re cutting estimates for capital expenditures in Europe at the fastest rate since the financial crisis as chief executive officers shy away from reinvesting in their own businesses and instead bulk up balance sheets or tempt shareholders with acquisitions and stock buybacks. While analysts are still calling for a 2.6 percent increase in capex from last year, the 19 million euros ($22 million) they predict each Stoxx Europe 600 Index company will spend on average in 2016 is the most bearish forecast in six years.