Investing.com – European companies announce significant share buyback programs in 2024, and Barclays (LON:) expects this strong buyback activity to continue through 2025.
companies have announced a share buyback program of about E290 billion, making 2024 the highest year for buybacks, Barclays analysts said, in a January 9 note.
“The Energy sector had a record high 11% of Mcap procurement processes, from last year. Tech also saw a rise, posting a 4.3% MCap gain in purchases. Finally, companies announced 2.5% of MCap, slightly less than last year,” the UK bank said.
Shrinking equity supply has been a recurring theme in European stocks over the past three years. Share buybacks have driven the overall dividend count lower during this period, and buybacks have generated a 1.9% yield on the STOXX 600 and contributed to 40% of total shareholder yield.
“Given the weak background of Europe – weak big data, concerns about the possible policies of the Trump administration coming to the danger of the US and China, some help is needed in the equity market, and we believe that the repurchase should be considered as a context,” Barclays added.
About 2% of trading volume in the STOXX 600 in 2024 came from buying shares. This percentage has been growing steadily since 2020, reaching its peak last year.
“Nearly 75% of the repayment plans set to expire in 2025 are yet to be implemented, opening the door for continued procurement into 2025,” added Barclays.
The UK bank expects revenue growth of 4% in 2025 for the STOXX 600, which is in line with ongoing sales activity but below the IBES consensus of 8%.
“Q4 2024 results season is about to begin, and historically it has been a big quarter for new purchase policy announcements. On average, 36% of new purchase policies were announced during Q4 results, compared to 21% in other periods of the year,” added the bank.