The country’s biggest listed companies are embarking on a share buyback bonanza even as the Australian sharemarket hits record levels, delivering a windfall to investors but leaving some worried that boards are becoming increasingly conservative and avoiding riskier growth opportunities.
About a quarter of the companies listed on the S&P/ASX 200 have bought back their own shares since January 1, placing the bourse on track to smash the record of 59 businesses last year.
That is because the August reporting season is typically the busiest period for buybacks, with 20 new programs announced during that period last year alone.
The surge in buybacks has coincided with a stunning rally this week, which has pushed the share prices of many blue-chip stocks such as Computershare, Soul Patts, BlueScope Steel and Macquarie to fresh highs.
On Thursday, AMP became the latest blue-chip to join in, announcing a $150 million buyback program despite shares hitting a seven-year-high.
“I’m seeing many companies buy back shares at the highs, and I’m not a massive fan of it because if they’re just buying consistently, it’s not a strong indicator of whether management thinks the shares are undervalued,” said Sean Sequeira, chief investment officer of Australian Eagle Asset, which oversees more than $1 billion.
“Could they get excess capital back to shareholders in a better manner? Probably, but this method supports their share price because it just means there’s a consistent buyer there.”
Source: https://www.afr.com/markets/equity-markets/investors-await-buyback-bonanza-but-worry-about-conservative-boards-20260805-p60lrv