In a notable trend, banks and defense companies are returning billions to shareholders through share buybacks, particularly as September 2024 approaches. This surge is attributed to increased profits driven by geopolitical tensions and rising interest rates. For instance, HSBC Holdings plc recently announced a $3 billion share buyback following a strong second-quarter net profit of $6.4 billion, which exceeded analysts' expectations. The bank's pre-tax profit rose 2% to $8.9 billion, and it has set aside an additional $3 billion for share buybacks after completing a previous program in May [461739cd].
HSBC has also made headlines as the world’s largest dividend payer in Q2 2024, disbursing a staggering US$11.7 billion, which included a US$4 billion special dividend from its Canadian operations. The bank's 2023 dividend was set at 61 US cents per share, with forecasts indicating an increase to 71 US cents in 2024 [45e92eae].
Similarly, other financial institutions are joining the buyback wave. Santander has announced a €1.5 billion buyback, while Standard Chartered plans to repurchase as many shares as possible. Barclays has also revealed a £750 million buyback plan. Collectively, UK banks reported a pre-tax profit of £44.2 billion in 2023, showcasing the financial health that supports these initiatives [49a1973c].
The aerospace and defense sectors are also capitalizing on this trend, with companies in the US and Europe expected to double their cash flows by 2026. BAE Systems, for example, initiated a £1.5 billion buyback. Apple has announced plans to spend $110 billion on share repurchases, highlighting the widespread nature of this strategy across various industries [49a1973c].
Critics of share buybacks argue that they contribute to economic inequality and may hinder long-term investments. Prominent figures like Elizabeth Warren and William Lazonick have expressed concerns regarding the implications of these financial maneuvers. Investment director Russ Mould suggests that 2024 could see record levels of buybacks, but analysts warn that such actions can be poorly timed, potentially leading to companies overpaying for their own shares [49a1973c].
In the context of DouYu Holdings Ltd., the Chinese livestreaming platform has announced a special cash dividend of $9.76 per share, amounting to a total cash payout of $300 million. This move comes after the company faced declining revenues and user engagement, showcasing a different approach to returning value to shareholders [55861ace].
Cathay Pacific Airways is also making headlines by planning to buy back the remaining 50% of preference shares issued to the Hong Kong SAR Government, valued at HK$9.75 billion ($1.25 billion). This buyback will mark the end of a government stake that was crucial during the pandemic recovery phase [26b88388].
As companies navigate the complexities of the current economic landscape, the trend of share buybacks continues to evolve, reflecting both opportunities and challenges in corporate finance. Meanwhile, Asia-Pacific dividends rose to US$39.5 billion, while global dividends reached US$606.1 billion, marking an 8.2% increase overall [45e92eae].