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According to Goldman, stock buybacks and mergers by US corporations will reach a six-year high in 2024.

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22 March (Reuters) – This year, U.S. corporations’ purchases of domestic equity through increased corporate acquisitions and stock buybacks will reach a six-year high of $625 billion, roughly equal to the amount that mutual funds and pension plans will unload, according to Goldman Sachs.

Cormac Conners, U.S. equities strategist at Goldman, stated in a note dated March 21 that “a surge in share buybacks and continued growth in cash mergers and acquisitions (M&A) will be the primary drivers of corporate equity demand.”

The Wall Street bank stated earlier this month that it anticipates new tab share repurchases by S&P 500 firms (.SPX) to rise 13% to $925 billion this year and surpass $1 trillion the next year.
The issuing of equity this year will somewhat offset the purchases, Goldman warned.

It anticipated that mutual funds and pension funds would sell $300 billion and $325 billion of equities, respectively, on a net basis, to provide a substantially larger counterbalance.

Pension funds would shift capital to lower-risk assets like bonds, while investors will flee actively managed mutual funds and toward passive index funds and exchange-traded funds (ETFs), according to Conners.

Furthermore, the brokerage predicted that international investors will sell $50 billion worth of US stocks this year due to the November presidential elections, which is a sharp contrast to last year when they purchased stocks valued at $179 billion.

“The United States is the world’s safe sanctuary… Nonetheless, Conners noted that there’s a good chance that internal unrest would increase in tandem with this year’s presidential race.

In addition to corporations, U.S. individuals will also be net buyers of domestic stocks this year, worth $100 billion, the brokerage said. This is a change from net sellers in 2023.

Conners noted that although families have sufficient funds due to their record $3.8 trillion in money market assets, they should be cautious as the temptation of borrowing and high equity allocations may continue to operate as deterrents.

 

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