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Investor and Issuer Engagement in Uncertain Times – Part 7
11 August 2020
IHS Markit's Perception Analytics team engages in in-depth
discussions with investors and analysts daily. Given recent market
volatility and significant economic uncertainty, IHS Markit will be
speaking to investors and analysts on a regular basis to assess how
the current situation with COVID-19 is impacting their evaluations
of and engagement with corporate issuers. In our seventh
installment, we gathered feedback on is whether the recent market
uncertainty has impacted investors' and analysts' views on share
repurchases. Highlights include:
Many investors view share repurchases negatively in the current
environment and caution against using state aid or going to debt
markets for funding buybacks.
"I would not take a buyback positively because at this point
in time I would prefer companies to be preserving liquidity rather
than using it for buybacks. There is a lot of uncertainty as to
whether there will be a second wave and another lockdown."
A group of investors have appetite for share repurchases citing
that it signals a healthy balance sheet and instills much needed
market confidence during periods of uncertainty.
"I continue to see share repurchases as a very useful tool
to make the capital utilization of the company much more efficient.
It is also a strong signal of confidence to the market, especially
in this tumultuous and very uncertain environment."
IHS Markit's Perception team will continue to gather real-time
market feedback as the situation unfolds, so please look out for
the next part of this series.
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