Investing.com – European corporates introduced important share buyback applications in 2024, and Barclays (LON:) expects this robust buyback exercise to proceed in 2025. 

corporations introduced share buyback program of round E290 billion, making 2024 the third-highest buyback quantity 12 months ever, analysts at Barclays mentioned, in a observe dated Jan. 9. 

“The Energy sector hit a record high with 11% Mcap buyback programs announced, up from last year. Tech also saw an increase, announcing 4.3% MCap in buybacks. Finally, companies announced 2.5% MCap, slightly below last year,” the UK financial institution mentioned.

Shrinking fairness provide has been an on-going theme for European shares during the last three years. Share repurchases have pushed total share rely decrease over this era, and buybacks have generated a 1.9% yield for the STOXX 600 and contributed to 40% of the overall shareholder yield. 

“Given Europe’s fragile macro backdrop – weak macro data, concerns around potential policies of the incoming Trump administration in the US and China hazard, some self-help is needed for the equity market, and we believe buybacks should be considered as a theme,” Barclays added.

Round 2% of buying and selling quantity on the STOXX 600 in 2024 got here from share buybacks. This share has been rising steadily since 2020, reaching its peak final 12 months. 

“Nearly 75% of buyback programs set to end in 2025 are yet to be executed, which opens the door for continued high buyback execution in 2025,” Barclays added.

The UK financial institution expects earnings development of 4% in 2025 for the STOXX 600, in step with sustained buyback exercise however barely beneath the IBES consensus of 8%.

“Q4 2024 results season is about to commence, and it has historically been a big quarter for new buyback policy announcements. On average, 36% of total new buyback policies are announced during Q4 results, compared with 21% in other seasons,” the financial institution added.