Asia-Pacific Free Cash Flow Could Reach $1.4 Trillion in 2027, Says CLSA

The free cash flow of listed firms in Asia-Pacific outside of Japan is estimated to be at $1.4 trillion in 2027 and $1.6 trillion in 2028, based on a research note issued by brokerage firm CLSA. Aggregate free cash flow for the region, according to the brokerage, will increase by 24% in 2026 and by 46% in 2027. 

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It was stated by CLSA that the overall corporate index may reach a consolidated net-cash position given the prevailing technology and demand for commodities. 

The research note stated that large manufacturers in the region are investing in artificial intelligence and technologies using operating cash flow instead of debts. CLSA cited Samsung Electronics and SK Hynix, estimating that the cumulative free cash flow for the next three years from the two companies will amount to more than 65% of their total market value. 

It also forecasted a significant rise in the cash balance of the leading players in semiconductors. TSMC, Samsung Electronics, and SK Hynix would have $1.67 trillion of net cash in 2028. Now, this figure is about $82 billion. 

The free cash flow yield of Asia-Pacific ex-Japan amounted to 6.4%, according to CLSA. The broker compared it with the following figures: 3.3% for MSCI World Index, 2.7% for S&P 500, and 1.8% for US Magnificent Seven Index. 

The report also listed shareholder-return programmes announced by companies across the region. Samsung Electronics has approved a capital-return programme worth ₩90 trillion-₩110 trillion for 2026 and committed to returning 50% of free cash flow. The programme includes a ₩30 trillion cash dividend in the third quarter. SK Hynix has announced a ₩40 trillion share buyback and cancellation programme. CLSA said this is equivalent to around 3.3% of total shares outstanding.  

The company has also increased its cumulative 2025-2027 payout target to more than 50% of free cash flow. Toyota Motor has launched a ¥1 trillion share buyback programme aimed at improving capital efficiency and return on equity, according to the note.  

The brokerage also referred to companies outside the technology sector. Santos is expected to deliver an average free cash flow yield of 14% over the next three years while maintaining a payout ratio of 60%-100%.  

Newmont is projected to average an 11% free cash flow yield through FY28. CLSA said price-to-book and price-to-core-earnings multiples across Asia-Pacific ex-Japan remain below historical peaks.  

The note cited PetroChina, which trades at around nine times forward earnings with a 6% dividend yield, and CNOOC, which trades at roughly six times earnings, with a 12% free cash flow yield and a 7% dividend yield.