This Will Be The Biggest Buyer Of Stocks In 2018

In July, many were surprised to learn (even though we have shown this many times prior), that according to Credit Suisse analysts there has been just one buyer of stocks since the financial crisis: the corporate sector, also known as “stock buybacks.”
Well, don’t change the channel, because according to Goldman’s just released forecast of fund flows in 2018, it will be more of the same as the single biggest buyer of stocks next year will be the same one as before:corporationg buying back stock, some $590 billion of it to be precise, and more than all other sources of stock purchasing in the coming year combined. In fact, without buybacks, instead of net equity demand of $400 billion in 2018, there would be nearly $200 billion of outflows, something not seen since the financial crisis.
Here’s the summary from David Kostin: “Corporate buybacks and ETF inflows will drive US equity demand in 2018. We forecast corporate equity demand will rise by 3% to $590 billion next year. Increased authorizations and high cash balances should more than offset headwinds to buybacks from high valuations.”
In addition to buybacks, Goldman is confident that the passive investing euphoria will continue, and expects expect investor purchases of ETFs to hit a record high of $400 billion in 2018. Investor preference for passive vs. active funds should continue to drive demand for ETFs.

This post was published at Zero Hedge on Oct 25, 2017.