A record percentage of Asian companies are destroying value for their shareholders, in a sign of the increasing strains caused by the region’s slowing economies and as the prospect of higher US interest rates looms.
A total of 38 per cent of companies in the region — excluding Japan — return less on their invested capital than those funds cost them in the first place, according to analysts at CLSA, the regional brokerage. The percentage burning through cash — 13 per cent — is also at a three-year peak, while a fifth are borrowing to pay dividends.
The study, of the 2,500 biggest companies in Asia-Pacific outside Japan, comes as company watchers raise the alarm about the quality of financial reporting, notably in Hong Kong. There, the number of warnings that auditors have made about the health of companies has risen sharply.