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A RELIABLE BUYER WHEN STOCKS WOBBLE? COMPANIES

Companies undertaking stock buybacks have emerged as one of the most reliable buyers of the assets when others step away, and last month again acted as a backstop for equities.

Corporate buybacks rose to their highest monthly pace in years in April, with a large portion going into U.S. stocks, according to JPMorgan.

“The strength of buybacks in April demonstrating once again the rather contrarian nature of corporate buying which tends to increase after an equity correction, thus acting as a backstop,” JPMorgan analysts led by Nikolaos Panigirtzoglou said in a report.

This behavior was also seen in the first quarter of 2023 during the regional banking crisis that followed the failure of Silicon Valley Bank, and in the first half of 2022 during the Ukraine war/inflation scare, they note.

Meanwhile, data by EPFR show that $550 billion in repurchases have been announced this calendar year as of May 4, which puts them on track to easily top the $1 trillion mark for the fifth time in the past five years and sixth time in the past eight years.

Recent large buyback announcements include a $100 billion announcement by Apple AAPL.O, and a $70 billion one by Google GOOGL.O, with EPFR analyst Winston Chua saying that “buybacks in the current earnings season are smashing all previous figures.”

(Karen Brettell)

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