The global buyback binge looks to be drawing to a close, and investors are unlikely to mourn the end of the record repurchase rush.
That is because executives would be well-advised to keep their powder dry, given rising interest rates, jittery consumers and mounting recession fears, according to fund managers.
Goldman Sachs Group strategists said that buybacks peaked in the first quarter and cut their outlook for S&P 500 repurchases by 10 per cent for 2023, citing the impact of margin contractions on earnings.
With companies coming off record buybacks, they can now focus on allocating their resources elsewhere, like mergers and acquisitions, long-term investments or cutting debt, said Kim Forrest, founder of Bokeh Capital Partners.
“If you’re heading into uncertain times and you’ve done big buybacks, you as a company can just tread water and your EPS [earnings per share] will go up or stay unchanged because now you have a smaller number of shares,” Ms Forrest said.
“It’s a way for companies to put their best foot forward.”
That is a view reflected in this month’s Bank of America global fund managers’ survey, which found that 60 per cent of investors want companies to improve balance sheets, while only 17 per cent advocate returning cash to shareholders.
For corporations, buybacks make sense right now.
Equities in Europe are the cheapest in 10 years, while those in the US sit on average long-term valuations with froth blown away by this year’s rout. That at a time when companies are showing near-record margins and have relatively clean balance sheets.
US companies are on track for a record $1.25 trillion of repurchases this year.
After that, buyback growth is set to slow as receding earnings growth, shrinking cash balances and recession fears are likely to constrain spending, Goldman strategists led by Ryan Hammond said.
Energy companies have led the buyback scorecard as their profits surged on higher oil prices, and now represent 5 per cent of total S&P 500 buybacks, up from less than 1 per cent in the first half of last year, according to Goldman.
But this trend is likely to be offset by a drop in financial companies’ share repurchases as they seek to meet capital requirements and prepare for an economic slump, the strategists said.
Among those energy majors that have made buyback announcements so far are TotalEnergies, which has a $7 billion share-buyback programme for 2022, while Shell said it will repurchase another $4bn of shares over the next three months, bringing the total repurchases for the year to $18.5bn.
In the US, other recent major buyback examples include defence contractor Lockheed Martin and aerospace technologies manufacturer L3Harris Technologies.
Tesla chief executive Elon Musk said the company could repurchase up to $10bn worth of shares in the next year.
In Europe, earnings season is setting the stage for an extension of what is already a record year for buybacks.
Among banks, UBS Group said it plans a “material” programme next year, while HSBC is considering repurchasing shares in the second half of 2023.
Chipmaker ASML Holding will update on the matter on November 11 after stronger-than-expected results. Cement maker Holcim said it will start a share buyback programme of as much as 2bn francs ($2bn) next month.
The UK has seen a particularly high level of buyback activity this year, with Imperial Brands joining in with the announcement of a £1bn programme.
But the outlook is deteriorating. Strategists at Bank of America and Morgan Stanley expect further earnings downgrades as rising costs of energy and wages pressure margins.
At least companies have the fallback that it is easier to reverse a repurchase programme than cut dividends.
Buybacks have also drawn certain scrutiny in Washington.
US President Joe Biden this month called on energy companies to plough their gains into production rather than giving more cash to shareholders.
A new 1 per cent tax on buybacks that will take effect next year will nix $1 from S&P 500 per-share profits in 2023, JP Morgan Chase's estimates show.
match info
Southampton 0
Arsenal 2 (Nketiah 20', Willock 87')
Red card: Jack Stephens (Southampton)
Man of the match: Rob Holding (Arsenal)
Springtime in a Broken Mirror,
Mario Benedetti, Penguin Modern Classics
How to vote
Canadians living in the UAE can register to vote online and be added to the International Register of Electors.
They'll then be sent a special ballot voting kit by mail either to their address, the Consulate General of Canada to the UAE in Dubai or The Embassy of Canada in Abu Dhabi
Registered voters mark the ballot with their choice and must send it back by 6pm Eastern time on October 21 (2am next Friday)
PREMIER LEAGUE FIXTURES
Saturday (UAE kick-off times)
Watford v Leicester City (3.30pm)
Brighton v Arsenal (6pm)
West Ham v Wolves (8.30pm)
Bournemouth v Crystal Palace (10.45pm)
Sunday
Newcastle United v Sheffield United (5pm)
Aston Villa v Chelsea (7.15pm)
Everton v Liverpool (10pm)
Monday
Manchester City v Burnley (11pm)
About%20My%20Father
%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ELaura%20Terruso%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3ERobert%20De%20Niro%2C%20Sebastian%20Maniscalco%2C%20Kim%20Cattrall%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%202%2F5%26nbsp%3B%3C%2Fp%3E%0A
UAE players with central contracts
Rohan Mustafa, Ashfaq Ahmed, Chirag Suri, Rameez Shahzad, Shaiman Anwar, Adnan Mufti, Mohammed Usman, Ghulam Shabbir, Ahmed Raza, Qadeer Ahmed, Amir Hayat, Mohammed Naveed and Imran Haider.
The specs
Engine: Dual 180kW and 300kW front and rear motors
Power: 480kW
Torque: 850Nm
Transmission: Single-speed automatic
Price: From Dh359,900 ($98,000)
On sale: Now
Who are the Soroptimists?
The first Soroptimists club was founded in Oakland, California in 1921. The name comes from the Latin word soror which means sister, combined with optima, meaning the best.
The organisation said its name is best interpreted as ‘the best for women’.
Since then the group has grown exponentially around the world and is officially affiliated with the United Nations. The organisation also counts Queen Mathilde of Belgium among its ranks.
Yahya Al Ghassani's bio
Date of birth: April 18, 1998
Playing position: Winger
Clubs: 2015-2017 – Al Ahli Dubai; March-June 2018 – Paris FC; August – Al Wahda
Voices: How A Great Singer Can Change Your Life
Nick Coleman
Jonathan Cape
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
The bio
Favourite book: The Alchemist by Paulo Coelho
Favourite travel destination: Maldives and south of France
Favourite pastime: Family and friends, meditation, discovering new cuisines
Favourite Movie: Joker (2019). I didn’t like it while I was watching it but then afterwards I loved it. I loved the psychology behind it.
Favourite Author: My father for sure
Favourite Artist: Damien Hurst
CREW
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Pakistan v New Zealand Test series
Pakistan: Sarfraz (c), Hafeez, Imam, Azhar, Sohail, Shafiq, Azam, Saad, Yasir, Asif, Abbas, Hassan, Afridi, Ashraf, Hamza
New Zealand: Williamson (c), Blundell, Boult, De Grandhomme, Henry, Latham, Nicholls, Ajaz, Raval, Sodhi, Somerville, Southee, Taylor, Wagner
Umpires: Bruce Oxerford (AUS) and Ian Gould (ENG); TV umpire: Paul Reiffel (AUS); Match referee: David Boon (AUS)
Tickets and schedule: Entry is free for all spectators. Gates open at 9am. Play commences at 10am
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
Managing the separation process
- Choose your nursery carefully in the first place
- Relax – and hopefully your child will follow suit
- Inform the staff in advance of your child’s likes and dislikes.
- If you need some extra time to talk to the teachers, make an appointment a few days in advance, rather than attempting to chat on your child’s first day
- The longer you stay, the more upset your child will become. As difficult as it is, walk away. Say a proper goodbye and reassure your child that you will be back
- Be patient. Your child might love it one day and hate it the next
- Stick at it. Don’t give up after the first day or week. It takes time for children to settle into a new routine.And, finally, don’t feel guilty.
Profile
Name: Carzaty
Founders: Marwan Chaar and Hassan Jaffar
Launched: 2017
Employees: 22
Based: Dubai and Muscat
Sector: Automobile retail
Funding to date: $5.5 million
SPECS
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2-litre%204-cylinder%20petrol%20(V%20Class)%3B%20electric%20motor%20with%2060kW%20or%2090kW%20powerpack%20(EQV)%0D%3Cbr%3E%3Cstrong%3EPower%3A%3C%2Fstrong%3E%20233hp%20(V%20Class%2C%20best%20option)%3B%20204hp%20(EQV%2C%20best%20option)%0D%3Cbr%3E%3Cstrong%3ETorque%3A%3C%2Fstrong%3E%20350Nm%20(V%20Class%2C%20best%20option)%3B%20TBA%20(EQV)%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3EMid-2024%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3ETBA%0D%3C%2Fp%3E%0A
