Investment strategy
April 29, 2020

The mother of all blackout periods: COVID-19’s impact on share buybacks

April 29, 2020
Wietse Nijenhuis
Client Portfolio Manager, Citi Investment Management
Zeshan Azam
Head of Systematic Equities, Citi Investment Management
power station at night

COVID-19 has massively disrupted share buyback activity. We consider what this may mean for equity prices.

With companies receiving federal aid barred from repurchases for the next 12-plus months and others conserving their cash as the pandemic unfolds, corporations have lost their go-to share price strategy. To get a sense of the scale of that, S&P 500 Index companies alone have spent $1.6 trillion on buybacks in the past two years.

With this end to the low volatility era Wietse Nijenhuis, Client Portfolio Manager, and Zeshan Azam, Head of Systematic Equities, anticipate a vastly altered markets landscape, with newly exacting investor scrutiny around the formerly Biggest Buybackers, changes in market structure, revision of security selection criteria and, perhaps, the launch of a new era for ESG investing.