With ex-U.S. developed markets awash in quantitative easing and, in the case of some markets, record low or negative interest rates, some market observers believe other markets will follow the lead of the U.S. and engage in massive share repurchases.
That could be good news for the PowerShares International BuyBack Achievers Portfolio (NYSEArca: IPKW), the international equivalent of the wildly popular PowerShares Buyback Achievers Portfolio (NYSEArca: PKW).
After spending $145.2 billion on share repurchases in the third quarter of 2014, S&P 500 members bought back $132.6 billion of their own shares in the fourth quarter, a drop of 8.7%.
“The $132.6 billion Q4 spend represents a 2.5% increase from the $129.4 billion spent during the fourth quarter of 2013. For fiscal year 2014, S&P 500 issues increased their buyback expenditures by 16.3% to $553.3 billion from $475.6 billion posted in 2013,” according to S&P Dow Jones Indices. [Buyback ETFs Remain Sturdy]
Foreign companies could follow suit, lifting shares of IPKW. On an aggregate basis, European firms have over $2.3 trillion in cash, prompting some analysts to encourage CEOs there to take advantage of low interest rates to repurchase shares.
However, European companies bought back just $125 billion of their own stock last year. Ex-U.K., IPKW allocates 19% of its weight to European companies. Notoriously cash-rich, but frugal Japanese companies are also joining the buyback bonanza.
Fanuc Corp. recently unveiled a buyback plan and last month, rumors swirled that Hitachi, Mitsubishi Heavy Industries and Tokyo Gas were mulling their own repurchase programs.