In his view, hoarding cash short-changes minority shareholders by resulting in a constant loss of income. This practice will also lower a company’s return on equity (ROE) and, over time, drag down its share price.
Wayne Lee of W Capital also believes that companies with substantial cash on their balance sheets that are not being put to work don’t make sense. “If you’re not using cash to do M&As or organic growth, why aren’t you distributing dividends?”
Sure, cash is liquid and provides security. However, inflation is constantly chipping away at its real value. Investors will also be left wondering if there are missed opportunities the company could have taken.
Yet things are rarely so simple. Certain companies — particularly family-owned companies or those run by founder-CEOs — may prefer larger cash buffers for a rainy day, or for the proverbial storm that the next generation might face.
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Apple co-founder and CEO Steve Jobs was famously known to hoard cash for “big, bold” moves. Having revived the company from near-bankruptcy in the 1990s, Jobs ran the company like it was still under siege, even as it accumulated US$98 billion in cash and equivalents by the end of 2011, selling millions of iPods and iPhones.
Tim Cook, who succeeded Jobs in August 2011 — two months before Jobs passed away — took a different approach. In 2012, Apple began paying dividends — its first since 1995 — and launched a US$10 billion share buyback programme, with a total of US$700 billion bought back by last year. While shareholders were rewarded, many observers note that Apple’s game-changing products largely came during the Jobs years. Even though Apple has been profitable, its innovations have arguably been more incremental, but there is no clear correlation.
At home, Mainboard-listed Hong Leong Asia reported net cash of $845 million for the FY2025 ended Dec 31, 2025, nearly double FY2024’s level. HLA, which has been paying 30% to 35% of its earnings, is looking to balance its payouts against capital expenditure (capex) requirements, said group CFO Josephine Lee at the FY2025 results briefing on Feb 26.
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Hospitality and property group, HL Global, is another example. The company’s cash and bank balances stood at $63.5 million as at Dec 31, 2025, compared to its market capitalisation of $37.1 million as at Feb 5.
When thinking about cash, the answer is rarely black and white. Companies operate under conditions that outsiders cannot always fully see. A war chest that looks excessive may be earmarked for an acquisition that has not yet been announced.
Even so, the problem is that enough companies are holding cash indefinitely with seemingly no timeline for future plans.
This is where market regulators ought to step in. While they do not — and should not — dictate how companies spend their money, they should mandate that cash cannot sit untouched forever. A reasonable framework would require companies with net cash above a certain threshold to deploy it within a set period or explain why it is being retained.
The idea isn’t new. Japan, which has been nudging its listed companies to do better, is already doing something similar. Just last month, its Financial Services Agency has reportedly put out draft rules requiring Tokyo-listed companies to show that they are using their cash hoard of some US$840 billion ($1 trillion) effectively.
While the new rules are not going to be legally binding, it is expected to result in changes in how the companies function. The result: higher share prices, more buybacks and a return in foreign investor interest. Singapore’s market needs the same. Cash is king, but only if the king works for the people.
