Source: Bloomberg, Unigestion, as of 3 November 2021.
After becoming flush with cash in the immediate aftermath of the coronavirus crisis, firms have started to put that capital to use. Indeed, among non-financial firms in the S&P 500 that have reported thus far, their cash balances have remained stable quarter-over-quarter and are down -3% year-over-year. One important use of cash has been capital expenditures, which are now in aggregate growing for the S&P 500 and Stoxx 600 and improving for the Energy/Oil & Gas sectors, which have seen some of the largest cuts in capex over the last few years, as our chart shows. A continuation of this trend would provide a key support to growth.
However, capex is not the only use of cash that is seeing significant growth. Buybacks for S&P 500 firms reporting thus far are up 13% quarter-over-quarter and 68% year-over-year (vs 7% and 20%, respectively, for capex). More than 80% of the share repurchases have been funded with cash, and over USD 730bn worth of buybacks have been announced this year, eclipsing the 2019 level of USD 702bn and approaching the massive USD 939bn seen in 2018.
The information and data presented in this page may discuss general market activity or industry trends but is not intended to be relied upon as a forecast, research or investment advice. It is not a financial promotion and represents no offer, solicitation or recommendation of any kind, to invest in the strategies or in the investment vehicles it refers to. Some of the investment strategies described or alluded to herein may be construed as high risk and not readily realisable investments, which may experience substantial and sudden losses including total loss of investment.
The investment views, economic and market opinions or analysis expressed in this page present Unigestion’s judgement as at the date of publication without regard to the date on which you may access the information. There is no guarantee that these views and opinions expressed will be correct nor do they purport to be a complete description of the securities, markets and developments referred to in it. All information provided here is subject to change without notice. To the extent that this page contains statements about the future, such statements are forward-looking and subject to a number of risks and uncertainties, including, but not limited to, the impact of competitive products, market acceptance risks and other risks.
Data and graphical information herein are for information only and may have been derived from third party sources. Although we believe that the information obtained from public and third party sources to be reliable, we have not independently verified it and we therefore cannot guarantee its accuracy or completeness. As a result, no representation or warranty, expressed or implied, is or will be made by Unigestion in this respect and no responsibility or liability is or will be accepted. Unless otherwise stated, source is Unigestion.
Past performance is not a guide to future performance. All investments contain risks, including total loss for the investor.