Nordea On Your Mind
Capex – a once in a decade opportunity

Underinvestment could drive a capex rally by 2020-25

We see a risk that corporate capex spending is becoming too low to secure future earnings power. The current 25-year-low global capex/sales ratio near a cyclical demand peak is unprecedented, especially when paired with record-high share buybacks; funds are going back to shareholders instead of into projects. For companies with a mandate to take a long-term view, we argue there is a potential opportunity to invest in sufficient capacity to meet greater demand in a few years’ time, when the digitalisation of supply chains cannot generate enough additional output on its own.

Capex and performance: Asset-heavy versus asset-light companies
Our analysis of asset-heavy versus asset-light companies reveals the long-term trend of asset-lights outperforming their counterparts. Investors seem to be extrapolating this trend into the future and are seemingly wary of the prospects for asset-heavy companies. We highlight potential structural drivers for capex, such as technology and the environment. Coupled with persistent underinvestment, these drivers could trigger a capex surge in a few years.

Ultra-low interest rate support for capex – what about when QE ends?
Interest rates impact the funding of capex projects, so should we expect today’s ultra-low rates to rise? And what is this QE we keep hearing about? To clear the mist and understand what is going on, we talk to Nordea Chief FX Strategist Martin Enlund. He describes how QE is believed to have lowered long bond yields by a percentage point or so and helped the global financial system weather the crisis of 2008-09, and goes on to explain how there are risks associated with central banks’ unwinding QE programmes in the next few years.

Introducing the capex heat map
In this report, we present our global capex heat map, which shows absolute capex spend and growth, by region and by industry sector for a universe of ~2,400 global companies. Capex momentum is sluggish, with forecast global growth of -5% in 2017 turning into a projected -1% over the 2017-19 period. The bright spots that are big enough to matter are US energy and IT, and European manufacturing and materials.

View from the top: Interviews with industrial leaders
We take the pulse on Nordic blue-chip manufacturers’ attitudes to capex spending and its drivers, in interviews with Ronnie Leten (chairman of the board of directors of Electrolux, board member of SKF, and proposed chairman of Ericsson and Epiroc), Panu Routila (CEO of Konecranes) and Tomas Eliasson (CFO of Sandvik).

How to Access the Report

Latest research on Strategy and Quant

27 Nov 2017: Nordea On Your Mind – Retail apocalypse: The growth of e-commerce
9 Oct 2017: Nordea On Your Mind:The death of dirty investing
4 Sep 2017: Nordea On Your Mind: AI and digital disruption


Johan Trocmé | Head of Corporate Research | +46 101 56 34 22 | Analyst info
Ellen Benktander | Analyst, Corporate Research | | Analyst info

The information provided within this website is intended for background information only. The views and other information provided herein are the current views of Nordea Markets as of the date of publication and are subject to change without notice. The information provided within this website is not an exhaustive description of the described product or the risks related to it, and it should not be relied on as such, nor is it a substitute for the judgement of the recipient.

The information provided within this website is not intended to constitute and does not constitute investment advice nor is the information intended as an offer or solicitation for the purchase or sale of any financial instrument. The information provided within this website has no regard to the specific investment objectives, the financial situation or particular needs of any particular recipient. Relevant and specific professional advice should always be obtained before making any investment or credit decision. It is important to note that past performance is not indicative of future results.

Nordea Markets is not and does not purport to be an adviser as to legal, taxation, accounting or regulatory matters in any jurisdiction.

The information provided within this website may not be reproduced, distributed or published for any purpose without the prior written consent from Nordea Markets.

Further reading