Photo: G. Ronald Lopez/Global Look Press/Zuma Press
Moscow, March 25 — “News. Economy.” The volume of share repurchases on the stock market of the United States in 2018 reached $806,4 billion amid falling tax taken by the administration trump.
According to the company, the S&P Dow Jones Indices, in the fourth quarter of 2018, the repurchase of shares increased by 62.8% year on year, reaching $223 billion (pdf).
During the past year, each quarter has increased to record levels (in quarterly terms) is the longest period of such record growth over the last 20 years.
By the end of 2018, the volume of share repurchases amounted to a record $806,4 billion, 36.9% higher than in 2017 As noted, most of the funds for the repurchase of shares spent the Apple Corporation bought own shares in the amount of $74,2 billion
Senior analyst at S&P Dow Jones Indices Howard Silverblatt noted that companies prefer to buy back their shares, rather than spend it on dividends:
“Stock buybacks exceeded the payment of dividends, both in terms of growth rate and the total amount spent company funds. The company continued to spend the saved tax funds to redeem its shares”.
It should be noted that this indicator is not a sign of stability of the American economy or improve the competitiveness of U.S. companies.
The previous record for repurchase in the United States was shown in 2007 — just before the financial crisis and recession in the United States.
In General, instead of increasing investment and capital costs against tax cuts by the administration trump, the company decided to spend a substantial portion of its cash in an effort to increase the market capitalization of their assets.
It is also worth noting that in the fourth quarter of 2018, which achieved a record amount of buybacks by us companies, US stocks showed its worst performance in many years: S&P 500 has fallen by 14%, the Dow Jones fell by 11.8% — this trend was the worst for the S&P and DJIA from the fourth quarter 2011, a Fall of 17.5% on the Nasdaq in the last quarter of 2018 was the biggest collapse for the index since 2008
At the end of 2018 — beginning of 2019 began a significant revision of the forecasts as the pace of U.S. economic growth in the next few years, and in terms of corporate profits in the United States.
Tax breaks trump, materialized in the repurchase of shares may not find a real reflection in any meaningful increase in investments of companies in their own business. This in particular, said a number of experts in the comments to NBC in connection with dismissals of employees made by the General Motors Corporation.
According to a senior economist at Moody’s Analytics Mark Zandi, “there is no evidence that tax cuts have led to a steady increase in capital cost”. chief economist of Pantheon Macroeconomics Ian Shepherdson also noted a minimal effect of lower taxes trump for the real sector:
“The slowdown in the us economy will be a reminder that large tax cuts may help growth in the short term, but this stimulating effect will last long.”
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