Financial professionals expect to continue accumulating cash holdings during the summer months, ahead of further anticipated uncertainty in global business markets, according to quarterly research published by the Association of Financial Professionals (AFP).

The quarterly cash indicators for Q2 2016, which gathers data both on the expectations of financial professionals as well as reported data from the second quarter, also show that US companies accumulated short-term corporate cash balances at a far quicker pace during the second quarter of 2016 than in the previous quarter. This indicates a significant weakening in companies' business confidence.

Brexit has 'curtailed' confidence

The AFP states that these results underscore “the continued guarded approach of business leaders”. It added that any likelihood of companies deploying their cash “has been curtailed with the outcome of the Brexit referendum, a tepid domestic economy and continued sluggishness in the global economy”.

The Q2 research found that:

• 38 per cent of organisations held larger cash and short-term investment balances at the end of Q2 2016 than they did at the end of Q1 2016 while 30 per cent had shed cash during the past three months; and
• 32 per cent of organisations anticipate expanding cash and short‐term investment balances over the next three months, while 16 per cent plan to reduce these balances.