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The
Wall Street brokerage had earlier expected a 4% annual rise in
companies buying back their own shares, against a 14% fall last
year, which was the second-largest decline since the 2008 global
financial crisis.
Buybacks will be driven by information technology and
communications services sector, with mega-cap tech stocks
expected to post stronger margins and profits, strategists at
Goldman Sachs said in a note on Wednesday.
The so-called Magnificent Seven stocks are likely to drive
"substantial" portion of S&P 500 repurchase growth in the year,
the strategists said.
Even though aggregate buybacks for the group fell 11% in 2023,
the slowest since 2017, companies may have capacity to increase
their buyback payouts this year, they noted.
"Improvements in the broader macro environment since the fall,
like the decline in Treasury yields, also help to inform our
forecast upgrade."
While solid earnings will be the primary tailwind, elevated
valuations and policy uncertainty surrounding November U.S.
general elections would pose headwinds to share buybacks, Cormac
Conners, U.S. equity strategist at Goldman Sachs, said.
For 2025, Goldman expects share repurchases to exceed $1
trillion for the first time, as earnings would remain strong,
while the outcome of presidential elections will remove policy
uncertainty.
(Reporting by Kanchana Chakravarty and Roshan Abraham in
Bengaluru; Editing by Mrigank Dhaniwala)
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