Investment trends shift toward capital efficiency and infrastructure

JPMorgan has identified a shift in how investors value electronics manufacturing services (EMS) firms, suggesting that return on capital employed (ROCE) will become a more critical metric than top-line revenue growth. The bank noted that while high price-to-earnings multiples have driven recent sector gains, capital-intensive nature and high net working capital requirements pose risks to free cash flow. Analysts expect market scrutiny of balance sheets to increase if earnings miss expectations or growth moderates.

Separately, a Marsh Global Asset Owner Barometer survey indicates a significant shift in institutional investment strategies. While cash remains a key tool for liquidity and defensive positioning, there is a notable trend toward infrastructure, which has become the most favored asset class among respondents. Other areas seeing increased allocation intentions include inflation-linked assets, developed market credit, and emerging market equities, as investors seek downside protection and diversification.