Growth Opportunities Hamper Buybacks In Emerging Markets

Thanks to GDP growing 53% higher today as compared to the pre-GFC peak, buy-backs are now very much a developed-market phenomenon, note Citi analysts.

Markus Rosgen and Yue Hin Pong of Citi Research in their recent research report titled: ”emerging market don’t do buy-backs, but don’t reward their absence either” point out capital markets in EM are less mature and hence corporates just don’t return the capital.

Higher GDP growth

The Citi analysts point out that compared to the peak GDP seen prior to the GFC, emerging market GDP in nominal US$ terms is up by 53%. However, in the case of developed markets, GDP is up by 15%.

Hence the analysts believe in the case of emerging markets, there have been opportunities...