So far this year, European companies have bought back shares worth $80 billion, the highest figure to date, with half of this concentrated in just 20 companies. In March alone, a monthly record of €30 billion was reached, and it is expected that over the next three months, 3% of the free float will be bought back.
Analysis by Morgan Stanley
The volume of share buybacks so far this year totals $80 billion, 30% higher than the previous record and the highest figure to date. Furthermore, a monthly record of $30 billion was reached in March.
There are currently around 300 European companies with active buyback programmes and some $215 billion in buybacks approved but not yet executed in the market. The average target date for completing these programmes is approximately seven months.
This is not surprising in a context where European companies’ cash positions remain high (over $1.1 trillion) and generate around $800 billion in FCF per year.
Pending programmes are largest in Telecoms (5% of free float, $24 billion), Energy (3.7%, $38 billion), Media (3%, $2.4 billion) and Food/Beverages (2%, $34 billion).
In the case of Banks, it is necessary to “renew” the programmes, as only $8 billion remains under the current ones after $25 billion has already been spent so far this year. It should be noted that these programmes are usually renewed as they come to maturity.
Of the $80 billion repurchased so far this year, just 20 companies account for approximately 50% of the total: Shell ($4 billion), Santander ($3.3 billion), SAP ($3 billion) and BBVA ($2.5 billion). As a percentage of average daily turnover (ADT), Energy and Banks have been the sectors with the highest buyback intensity so far this year, accounting for around 2% of total turnover in each sector.
To capitalise on this trend, the strategists at European Derivatives have created a buyback basket with a forward-looking focus, comprising companies that still have buyback programmes that have not been executed (or have been partially executed).
It groups together the stocks with the highest expected buybacks over the next three months, both (a) as a percentage of the free float and (b) in relation to trading volumes (average ranking of both metrics). On average, it is expected that approximately 3% of the free float will be repurchased over the next three months (median of 2%) with an average remaining duration of the programmes of around five months.
The basket has outperformed the Stoxx Europe 600 by 23% since January 2024, by 15% since January 2025 and by 4% over the year, generally trading at a discount of 1–2x to the Stoxx Europe 600.
