企业在投资但不是在投资过去

1、13August 2019GlobalEQUITIESDMs Intangible assets to private GDP (%)What caught my eye? v.114Businesses are investing but not into the past70%60%50%40%30%20%10%Total Intangible Asset asKey pointsKey points Most investors assume that businesses are under-investing. This is not true. The private sector

2、 is investing in the future: Intangibles & Information. This has serious implications for the world, labour markets & EMs.0%United StatesFranceUnited KingdomGermanyJapanSpainItalyPrivate sector invests but not in traditional ways; instead2000 2016Source: Corrado, Haskel et al; Macquarie Research, Au

3、gust 2019US Intangible assets (% of non-residential private investment)40.0% Software, R&D &Intellectual/Non - Residential% Private InvestmentAverage (1950-2019)30.0%25.0%20.0%15.0%10.0%5.0%19501953195019531956195919621965196819711974197719801983198619891992199519982001200420072010201320162019Source

4、: BEA; Macquarie Research, August 2019China Intangible assets (% of GDP)RMB mnAs % of GDPIt has become popular to blame financial speculation and share buybacks for holding back private sector investment. A lack of such investment is then blamed for stagnating productivity and rising inequality. The

5、re are however two problems with this argument. First, there is no relationship between levels of capital investment or R&D and share buybacks. Second, and more ominously, it is factually incorrect that the private sector is not investing as much as in the past. In most DMs, private sector fixed ass

6、et investment is currently at broadly the same level relative to GDP as in the 1970s-80s.However, it is true that todays private sector is not investing in the same way, and new types of investment have different economic implications. The private sector is doing what it does best - investing in the

7、 future, not the past. The future does not belong to buildings, factories and machines, as it did in the 19th & 20th centuries. Rather, it belongs to software, IT, platforms & intangibles. Todays success is about experiences, scalability, networks and spill-overs; not factories or roads. Hence, glob

8、al private sectors are increasingly driven by intangibles.At the same time, the public sector has systematically reduced spending. Indeed, most of the decline in DM fixed asset investment is not due to the private sector-1995200020089.0%8.0%7.0%6.0%5.0%4.0%3.0%2.0%1.0%0.0%investing less, but rather

9、to significant cut backs by the public sector. The private sector is not responsible for ensuring that roads are maintained, grids function or basic R&D occurs. These are largely the responsibility of the public sector, which has truncated its spending from 6%-7% of GDP in 1950s-70s to 3% a

10、ngibles rule - serious implications, particularly for EMsThe challenge facing economies today is that investment with the strongest middle-class creation and local multipliers (i.e. machinery, equipment, buildings and structures) now accounts for only 50% of private sector investment in mostIntagibl

11、eInvestmentIntagible Investment as % ofGDPSource: Wu, Hao, 18; Macquarie Research, August 2019Inside HYPERLINK l _bookmark0 Businesses maximising returns not investments 2 HYPERLINK l _bookmark1 Public sector should be maximizing societalreturns HYPERLINK l _bookmark1 8 HYPERLINK l _bookmark2 Emergi

12、ng Markets China isgettinglighter HYPERLINK l _bookmark3 Intangibles = inequalities, conflicts & EM HYPERLINK l _bookmark3 regression HYPERLINK l _bookmark4 Appendices16AnalystsMacquarie Capital Limited HYPERLINK /directory/people/details?analystId=3736 Viktor Shvets +852 3922 3883 HYPERLINK mailto:

13、viktor.shvets viktor.shvets HYPERLINK /directory/people/details?analystId=5317 Perry Yeung +852 3922 4769 HYPERLINK mailto:perry.yeung perry.yeungDMs, while intangibles (i.e. software, R&D, intellectual) make up one-third of business investment, double levels two decades ago. In some countries (like

14、 the US), the stock of intangibles is already more than 50% of GDP. Neither people nor politics see the benefit. On the contrary, they correctly suspect that the objective is to reduce marginal pricing power of labour and competitors. While EMs are still quite conventional, China is also starting to

15、 tilt towards a lighter world, with 15-20% of gross fixed capital formation dedicated to softerareas.Intangibles have significant implications for the industrial age world. First, they shift employment to lower productivity occupations. Second, they replace, not augment, labour, eroding peoples marg

16、inal pricing power. Third, light capital has higher scalability and network effects, and hence it obliterates boundaries between industries, amplifies inequalities while powering disinflation. Fourth, light capital highlights the urgent need for higher public sector spending. Fifth, it drives a wedg

17、e between countries that embrace the new age and those that do not. It is particularly bad news for EMs, with most likely to revert to an underdeveloped status rather than catching up. But, there are exceptions, most notably China, and possibly India. DMs are much better positioned, particularly US

18、andJapan.Please refer to page HYPERLINK l _bookmark5 23 for important disclosures and analyst certification, or on our website HYPERLINK /research/disclosures /research/disclosures.Most investors and government bodies highlight lack of private sector investmentBusinesses maximising returns not inves

19、tmentsThere is something fundamentally different about intangible investmenthelps us to understand some of the key issues facing us today: innovation and growth, inequality, the role of managementand policy reform, Jonathan Haskel and Stein WestlakeIt has become popular to blame businesses for not c

20、ommitting sufficient capital to fixed assets, infrastructure and productivity. Whether the IMF, World Bank or CBs, there has been a consistent chorus of voices bemoaning lack of investment, either as a prop for todays growth or to ensure future growth. Indeed, if one examines national gross fixed ca

21、pital formation, in most countries, the trend has been eroding for decades. This applies to global data, OECD, the Eurozone, US or Japan. If we ignore China, investment trends in most emerging markets were also muted.For example, global gross fixed capital formation which was consistently around 26%

22、-27% of GDP in 1960s-70s has dropped to 23%-24% of GDP today, and, if we exclude China, the average is down to as low as 21%-22% of GDP. For OECD countries, the capital intensity is down to 21%. Although there was a bounce from the recessionary lows of 2010, nevertheless, there is no doubt that the

23、downtrend is firmly established; hence, the argument of under-investment.Fig 1 Global - fixed (%ofGDP)Fig 2 DMs - fixed capital (% ofGDP)28.027.026.025.024.023.022.021.019701972197019721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016201830.028.026.024.022.020.

24、018.016.014.019701972197019721974197619781980198219841986198819901992199419961998200020022004200620082010201220142016201840.038.036.034.032.030.028.026.024.022.020.0GlobalOECDGlobal (exChina)EurozoneUKUS Japan,rhsSource: World Bank; OECD; Macquarie Research,August2019Source: World Bank; OECD; Macqua

25、rie Research, August2019however, it is not the private but the public sectors that have reduced spendingHowever, the picture becomes more nuanced when we examine individual components and spending categories. Most of the absolute erosion in investment seems to have occurred in the public rather than

26、 private sectors. In 1950s-70s, the view that the private sector is a more efficient allocator of capital has not yet morphed into immovable dogma, and hence, there was a greater political acceptance of public sector spending on core infrastructure (from hydro-electric schemes to highways, basic R&D

27、 to college campuses). However, since 1980s, the idea that the government is a source of all the bad stuff, rather than a solution to problems, precluded public sector spending. As governments vacated these spaces, the private sector never truly moved-in.Hence, a large portion of the drop in fixed a

28、sset investment was due to a decline in spending by the public rather than the private sector. For example, in 1950s-60s, the US public sector spent around 6%-7% of GDP. By the early 2000s it was down to 4% and now it is 3.4% of GDP. Similarly, Japans government fixed asset investment was 6.5% of GD

29、P in 1994, but now it is 3.8% of GDP while in Eurozone, public sector spending dropped from 4% to 2.6% of GDP.Fig 3 Public gross fixed (% ofGDP)Fig 4 US public gross fixed capital (% of431994199519941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720188.0%7

30、.0%7.3%6.0%5.0%4.0%3.48.0%7.0%7.3%6.0%5.0%4.0%3.4%3.0%2.0%1.0%0.0%6.56.05.55.04.54.03.53.0195419571954195719601963196619691972197519781981198419871990199319961999200220052008201120142017Government Sector Gross Investment/GDP (%)EuroAreaOECDJapan,rhs Average (1950-2015)Source: World Bank; OECD; Macqu

31、arie Research,August2019Source: BEA; Macquarie Research, August2019However, as far as private sector gross fixed asset investment is concerned, there is no evidence of any sustained decline. Todays investment as a proportion to GDP is broadly in line with levels in the 1970s-80s, though modestly low

32、er than in the 1960s. For example, in the US, private sector fixed asset investment currently stands at 17.6% of GDP vs an average of 17% between 1950 and 1980 and 17.3% between 1990 and 2015. It looks even better, if we disregard residential investment and just focus on businesses, with todays numb

33、ers ahead of historical averages. The same pattern is evident when we look at Eurozone, Japan or OECD.Fig 5 US Private sector domestic investment(%GDP)Fig 6 US non-residential (%GDP)23.0%21.0%19.0%17.0%15.0%13.0%11.0%19501953195019531956195919621965196819711974197719801983198619891992199519982001200

34、42007201020132016201916.0%15.0%14.0%13.0%12.0%11.0%10.0%9.0%8.0%7.0%19501953195019531956195919621965196819711974197719801983198619891992199519982001200420072010201320162019Gross Private Domestic Investment/GDP Average (1950-1980) Private non-residential GCF/GDPAverage (1950-2015)Source: BEA; Macquar

35、ie Research,August2019Source: BEA; Macquarie Research, August 2019Fig 7 US Residential domestic investment(%GDP)Fig 8 Global sector (%Housing Bubble8.0%Housing Bubble7.0%6.0%5.0%4.0%3.0%2.0%1.0%1950195319501953195619591962196519681971197419771980198319861989199219951998200120042007201020132016201920

36、.0%19.0%18.0%17.0%16.0%15.0%1995199619951996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201825.0%24.0%23.0%22.0%21.0%20.0%19.0%18.0%17.0%16.0%15.0%ResidentialInvestment/GDP (%) Average (1950-2015)EuroAreaOECDJapan,rhsSource: BEA; Macquarie Research,August2019S

37、ource: World Bank; OECD; Macquarie Research, August2019Private sectorinvestsbutmostly intangibles Should we therefore disregard concerns of private sector under-investment? The answer is that it is not so much the absolute level of investment that matters but rather where the private sector invests.

38、 The nature of business investment has changed radically when compared to either the 1970s or the 1980s. In the past, the spending focused almost entirely on tangible assets, such as buildings, structures, factories and machinery. These were bulky and expensive projects and employed a lot of people.

39、 They also led to extensive supply chains that were generally located in a broadly the same location (i.e. clusters) and offered a high local economic multiplier that politicians, people and communities saw and welcomed.Alas, this world no longer exists and indeed has not really existed for at least

40、 two decades. The new era is dominated by intangibles. It is all about reduction in costs, improvement in efficiency, repositioning of products and brands at a much faster than hitherto pace and redesign of how products and services are delivered to the ultimate customer. As discussed in our prior r

41、esearch papers, the new world is one of a much greater scalability, lower capital intensity and constantly eroding marginal pricing power of products and services. It requires businesses to work hard at reducing marginal costs while appropriating as many spill-over effects from other corporates and

42、industries as possible. Hence, management teams are dedicating far more resources to softer areas of IT, technology, software, intellectual rights rather than buildings, structures or machinery.For example in the US in 1970, building and structures accounted for almost 55% of national gross fixed as

43、set investment. Today, it is below 40%. Digging deeper, we see that private sector non- residential fixed asset investment, structures and buildings were responsible for around 1/3 of business capital commitments in the 1950s-70s and today are closer to 21%-22%. While estimatesInvestments structures

44、and machinery isbutfor the Eurozone and Japan are of a far shorter duration, the trends are similar. In 1995, 56% of Eurozones gross fixed capital formation was in the area of buildings and structures and today it is closer to 49% while in Japan it is down from 55% in 1995 to 42% in 2018. Only count

45、ries that have their entire business model wrapped around building houses for a growing population (such as Australia and Canada) are building and structures still dominant.The same trends are evident in conventional industrial machinery and equipment. Whereas in the 1950s-70s, around 45%-55% of the

46、 US private non-residential fixed asset investment was dedicated to machinery & equipment (ex IT and computers), today, this ratio is down to 29%.Fig 9 Global Building & structures investment(%GDP)Fig 10 US Buildings & structures (%GDP)13.012.512.011.511.010.510.09.59.08.5199519961995199619971998199

47、9200020012002200320042005200620072008200920102011201220132014201520162017201817.016.015.014.013.012.011.010.09.08.014.013.012.011.010.09.08.07.06.0197019721970197219741976197819801982198419861988199019921994199619982000200220042006200820102012201420162018EuroAreaOECDJapan,rhsSource: World Bank; OECD

48、; Macquarie Research,August2019Source: World Bank; OECD; Macquarie Research, August2019Fig 11 US Structures (% ofnon-residential investment)Fig 12 US industrial & transport equipment40.0%35.0%30.0%25.0%20.0%195019531950195319561959196219651968197119741977198019831986198919921995199820012004200720102

49、0132016201960%55%50%45%40%35%1950195319501953195619591962196519681971197419771980198319861989199219951998200120042007201020132016201960%55%50%45%40%35%30%25%20%Structures % of Non-Residential investment (%) Average (1950-2019)Industrial & Transport Equipment (ex IT)/GDPIndustrial & Transport Equipme

50、nt (ex IT)/Non-Residential Private Investment, rhsSource: BEA; Macquarie Research,August2019Source: BEA; Macquarie Research, August2019investmentinIT, software,R&Dand intellectual capitalrapidlyrisingAs discussed in our various notes, we live in a world of declining returns on humans andconventional

51、 capital but rising returns on digital, social and intellectual capital. Hence, the private sector has been re-weighting its investment away from bulkier industrial-age items and towards areas of rising returns. This process was clearly facilitated by the simultaneous de- regulation of the global pr

52、oducts and labour markets, which allowed the private sector to optimize costs and investments across the world. Thus, a considerable portion of heavy and more conventional investment moved to emerging markets (and especially China), but as we discuss below, even in some of the key EMs the patterns o

53、f investment are also starting to change.As can be seen below, IT, Software, R&D and various forms of intellectual capital in the US used to represent not much more than 15%-20% of non-residential private investment in the 1950s-60s. It was closer to 25% in the 1970s and today it is approaching 50%.

54、 The growth was particularly explosive in softer areas (i.e. outside of computers and hardware). Software, R&D and intellectual property rights now account for 35% of investments made by US businesses. The US non- residential private sector is already investing around US$1.4tr in the New Age per ann

55、um, including over US$1tr in soft and intangible areas.While it is harder to find similar statistics for other major developed economies, soft investments (i.e. R&D, software and intellectual properties) are also on a steeply rising curve. For example, in Japan these areas currently represent around

56、 23%-24% of total national gross fixed asset investment (vs 12% in 1995) and in Eurozone such investments constitute around 20% of grossfixed capital formation vs 13% in 1995. As far as the private sector is concerned, intangibles account for around 30% of their total investment. Relative to GDP, th

57、ese investments account to around 5.5% of GDP in Japan vs 3.5% in 1995 and over 4% of GDP in Eurozone vs 2.7% in 1995. In the US, these softer areas account for 5% of GDP.Fig 13 US IT, Software, R&D & intellectual investment (% of non-residential private investment)IT, Software & Intellectual Proper

58、ty/Non Residential Investment (%) IT, Software & Intellectual Property/Non Residential Investment (%) Average (1950-2019)50.0%45.0%40.0%35.0%30.0%25.0%20.0%15.0%10.0%5.0%19501953195019531956195919621965196819711974197719801983198619891992199519982001200420072010201320162019Fig 14 US IT, Software, R&

59、D & intellectual non-residential private investment (% of GDP) IT, Software & Intellectual Property/Non Residential Investment to GDP IT, Software & Intellectual Property/Non Residential Investment to GDP Average (1959-2019)7.0%6.0%5.0%4.0%3.0%2.0%1.0%195919621965195919621965196819711974197719801983

60、198619891992199519982001200420072010201320162019Source: BEA; Macquarie Research,August2019Source: BEA; Macquarie Research, August2019Fig 15 US Soft Areas - Software, R&D & intellectual investment (% of non-residential private investment) Software, R&D &Intellectual/Non - Residential Private Investme