Source: Unigestion, Bloomberg, as of 23 July 2021.
Following banner years for corporate buybacks in 2018 and 2019, buybacks cooled in 2020 even though they remain elevated relative to their long-term history. Our chart illustrates net buybacks (buybacks less issuance) per share, showing how most of this activity was concentrated in the mega-cap tech names found in the Nasdaq 100. After the cool down in 2020, 2021 has seen a stabilisation and looking at announced buybacks from S&P 500 firms, the pace is consistent with that seen in 2019.
If firms follow through on their plans, this reduction in equity supply would be a significant tailwind for markets over the rest of the year. On the other hand, it is interesting to note that firms in the Russell 2000 have, on net, been increasing their equity supply over the last few years.
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