- Wanda Research said corporate buyback announcements were ‘traded’ in April.
- A surge in buybacks will help mitigate the setback in the US equity market in the event of a draw down.
- “As the net equity supply shrinks every dollar invested in the US market, there will be a greater marginal impact,” Wanda said.
- See more stories on Insider’s business page.
According to independent equity research firm Wanda, there has been an uptick in planned corporate share buybacks and has helped support US stocks.
Share buyback announcements “exploded” Last week, Apple said its board had authorized a $ 90 billion increase in its existing share repurchase program, with Google’s parent company Alphabet saying that its board had made its own additional Greenlighted the $ 50 billion repurchase. Store.
The announcements contributed to advancing US stocks as investors in April gained the S&P 500 and the Nasdaq Composite by at least 5% each month and the index did not shy away from record highs.
Wanda Research said the planned buyback could help the stock market in two ways, with Wandatrack increasing its retail investment activities on hand with 9,000 individual stocks and ETFs in the US.
Wanda Research senior strategist Ben Onatibia and analyst Giacomo Pientoni wrote in a note on Monday, “In the event of a fall, corporate desks will buy shares at discounted valuations and jerk off institutional selling.”
Secondly, they say the net equity supply will be negative through 2021, even though recent increases in IPOs and share offerings have continued. Companies in the US are issuing new shares at an annual pace of US $ 660 billion through April, while S&P companies have announced annual buybacks worth $ 860 billion.
Wanda said, “As the net equity supply is invested in the US market, every big dollar will have a minor impact and the US equity will outperform against the equity markets around the world.”
Bank of America recently stated that Wall Street could be on track for a $ 900 billion gross S&P 500 buyback in 2021.