Live Markets: Buybacks support financial share prices, but for how long?

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10/05/2024 10:15

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    BUYBACKS SUPPORT FINANCIAL SHARE PRICES, BUT FOR HOW LONG?
    Buybacks have have been all the rage in Europe's financial sector recently, with banks
specifically set to return a record sum to shareholders this year. 
    It is one factor behind bank shares' relative outperfomance. A basket of European banks
 .SX7P  has surged 19% in 2024, outperforming the STOXX 600's  .STOXX  8.8% rise.  
    Analysts at Citi Research expect banks to announce 79 billion euros of dividends and execute
46 billion euros in buybacks in 2024. They see diversified financials announcing 12 billion
euros in dividends and executing 2 billion euros in buybacks, while for insurers those figures
stand at 34 billion euros and 11 billion euros. 
    Recently the likes of Dutch bank ABN AMRO  ABNd.AS , Spanish bank BBVA  BBVA.MC  and insurer
Swiss Life  SLHN.S  have all completed their respective buybacks. Others, like Sabadell
 SABE.MC  and Unicredit  CRDI.MI , have announced new ones. 
    Share buybacks are typically supportive of a company's share price. 
    From Citi's calculations, the names for which buybacks are currently providing the most
technical support include Dutch bank ING  INGA.AS , FTSE-listed bank Standard Chartered  STAN.L 
and Dutch insurer Aegon  AEGN.AS .
    But all good things come to an end, and the latter two are expected to see support end in
the coming months. 
    "Technical buyback support" is also expected to end soon for Spanish bank Caixa  CABK.MC ,
Swedish private equity firm EQT  EQT  and UK insurer Aviva  AV.L .
    Overall, the analysts have a market weight rating on banks and see the most upside for UK
banks. 
    
    (Lucy Raitano)
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        FOR FRIDAY'S OTHER LIVE MARKETS POSTS: 
    BASE RATE CUTS NOT A CURE FOR REAL ESTATE FIRMS CLICK HERE
        NEW RECORDS FOR STOXX 600, FTSE 100 AND DAX; CAC CLOSING IN ON FRESH PEAK CLICK HERE
        EUROPEAN SHARES SET TO END STRONG WEEK ON A HIGH CLICK HERE
    RATE CUT HOPES FAN RISK RALLY CLICK HERE
        
  

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