1、GlobalEquitiesAlpha StrategyTime to take a breatherBuyback SpecialWeaker earnings growth weighs on global buybackactivities, which have begun to decline from their 2018 all-timehighsGlobalEquitiesAlpha StrategyTime to take a breatherBuyback SpecialBy contrast, different buyback yield factors have pe

2、rformed strongly year-to-date due to their quality signallingeffectWe highlight top-ranked global stocks from ourbuyback screening and total shareholder yieldmodelsDr. Philipp Kaufmann*, CFA Equity StrategistHSBC Trinkaus & Burkhardt HYPERLINK mailto:philipp.kaufmannhsbc.de philipp.kaufmannhsbc.de+4

3、9 211 910 1458Volker Borghoff* StrategistHSBC Trinkaus & Burkhardt HYPERLINK mailto:volker.borghoffhsbc.de volker.borghoffhsbc.de+49 211 910 329811 December 2019Mid-cycle slowdown in a secular buyback boomGlobal share repurchases look set to decline further from their 2018 all-time highs. Weaker ear

4、nings growth is likely to slow down the buyback spree subsequent to the 2017/2018 US tax reform. Global 12M trailing gross share repurchases currently amount to about USD1.3trn or 1.8% of total market cap and are expected to decline by nearly 30% over the next twelve months according to FactSet cons

5、ensus.On a more positive note, the buyback yield factor has fared quite well this year. The globaltopdecileofourbuybackscreeningmodelhasoutperformedbyabout8%y-t-d. Interestingly, the factor has worked best in markets outside North America, indicating that buybacks provide a quality signal amidst a l

6、ow-growth late-stage economic downswing. We remain constructive on the factor on the back of a substantial 12M fwd P/E discount and a balanced equity styleprofile.On pages 6 to 11, we display six global and European buyback screens, highlighting top-ranked stocks with high trailing net buyback yield

7、 and total shareholder yield, respectively, as well as cash-rich names with significant expected repurchase volumes. We also provide a link to our buyback stock-selection model (Excel file here), which can be used to screen more than 8,000 stocks globally.Employedbyanon-USaffiliateofHSBCSecurities(U

8、SA)Inc,andis not registered/ qualified pursuant to FINRAregulationsRel. performance of global buyback yield factors (BBY, top quintiles)Aggregate sell-side analysts median forecast12512011511010510095Apr-16 Dec-16 Aug-17 Apr-18 Dec-18 Aug-1912M fwdGrossBBY12M trl NetBBY 12M trl GrossBBY8006004002001

9、,06675212M trl GrossBuyback Volume (in1,06675212M fwd Gross Buyback Volume (in USDbn)Source: MSCI, FactSet, HSBC calculationsUniverse is based on the largest 4,000 constituents by market cap from the MSCI ACWI IMI with at least two FY1/FY2 EPS estimatesSource: MSCI, FactSet, HSBC calculationsSample

10、includes all 2,661 companies from the MSCI ACWI IMI that have both a value for 12M trl gross buybacks and an estimate for 12M fwd gross buybacksDisclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaimer, wh

11、ich forms part of it.Issuer of report: HSBC Trinkaus & Burkhardt AGView HSBC Global Researchat:https: HYPERLINK / /Contents HYPERLINK l _TOC_250011 Outlookfor20203 HYPERLINK l _TOC_250010 Buyback activities likely toslowdown3 HYPERLINK l _TOC_250009 Buyback factor: strong alpha signal in late-staged

12、ownswing HYPERLINK l _TOC_250008 Trailing twelve months gross and net sharerepurchaseactivities HYPERLINK l _TOC_250007 Buybackstock screens5 HYPERLINK l _TOC_250006 Screeningcriteria5 HYPERLINK l _TOC_250005 Buybacks aroundtheworld12 HYPERLINK l _TOC_250004 Buybacks follow theearningscycle12 HYPERL

13、INK l _TOC_250003 Important determinants of share buybacks HYPERLINK l _TOC_250002 Buyback factorinvesting17Appendix: HSBCs globalbuyback model20 HYPERLINK l _TOC_250001 Disclosureappendix23 HYPERLINK l _TOC_250000 Disclaimer26Outlook for 2020Quickly decelerating earnings growth and the fading impac

14、t of the 2017 US tax reform have already led to declining buybackvolumes2020 could be similar to 2015-2016 when repurchase activities took a temporary breather, but remained supported byFCFBy contrast, the buyback yield factor has outperformed strongly y-t-d and provides a favourable signal in times

15、 of weaker earningsgrowthBuyback activities likely to slow downShare buybacks are already off their 2018 all-time highsBuyback volumes expected to be lower in 2020 due to ongoing economic weaknessShare repurchases have lost some steam throughout 2019 against the backdrop of weaker economic prospects

16、 and earnings growth downgrades. The global 12M trl gross buyback volume currently stands at nearly USD1.3trn, with global net buybacks amounting to USD730bn overthetrailingtwelve-monthwindow.Bothfiguresarealreadyabitofftheir2018recordpeaks.We expect 2020 to be similar to the 2015-2016 period when b

17、uyback activity slowed as a result of economic uncertainty and negative aggregate earnings growth. FactSet consensus estimates point to a drop in gross repurchase volumes of nearly 30%, which is not too surprising given that buybacks tend to be pro-cyclical. However, we do not expect more than a mid

18、-cycle downward correction in a secular buyback boom that started in the early 2000s as depicted by charts 1 to 6overleaf.In summary, the uncertain economic outlook for next year, a manufacturing cycle that has only shown some tentative signs of stabilisation and elevated financial leverage could be

19、 the major headwinds for buybacks next year. Support should, however, come from still decent FCF growth and an equity market currently rewarding share buybacks by higher relative stock returns.Note that lower buyback volumes could also mean less downside market support, as US corporations have been

20、by far the largest group of net buyers in the US equity market (see Global Equity Strategy How to spend it, 11 February 2019).Buyback factor: strong alpha signal in late-stage downswingThe buyback yield factor currently benefits from its quality signalling effectThe buyback yield factor has performe

21、d quite well so far in 2019. The global top decile of our buyback stock screening model, for instance, has beaten the market by about 8% y-t-d. We think that the current strength of the buyback yield factor comes from the quality signal it sends to the market. Typical companies conducting share buyb

22、acks have style biases towards profitability, low risk, lower valuation as well as larger size, which as a combination could prove to be favourable in a late-stage downswing scenario.As long as we do not get more visibility with respect to the 2020 earnings outlook and significant progress in the US

23、-China trade dispute, buybacks are likely to remain a key differentiator in a subdued growth environment.Trailing twelve months gross and net share repurchase activities1. Global: 12M trl grossbuybackvolume2. Global: 12M trl net buybackvolume1,4001,2001,0008006004002000199019941998200220062010201420

24、184.5%4.0%3.0%2.5%1.5%1.0%0.5%0.0%0-200-400-600-800199019941998200220062010201420181.5%1.0%0.5%0.0%-0.5%-1.0%-1.5%-2.0%-2.5%Gross Buyback Volume in USDbn (LHS)Gross Buybacks / Market Cap in % (RHS)Net Buyback Volume in USDbn (LHS)Net Buybacks / Market Cap in % (RHS)Source: MSCI, FactSet, HSBC calcul

25、ationsUniverseisbasedontheconstituentsoftheMSCIACWIIMISource: MSCI, FactSet, HSBC calculationsUniverse is based on the constituents of the MSCI ACWI IMI4. North America: 12M trl net buybackvolume1,2001,0008006004002000199019941998200220062010201420186.0%4.0%2.0%0.0%8002000-200-6001990199419982002200

26、62010201420184.0%3.0%2.0%1.0%0.0%-1.0%-2.0%-3.0%-4.0%Gross Buyback Volume in USDbn (LHS)Gross Buybacks / Market Cap in % (RHS)Net Buyback Volume in USDbn (LHS)Net Buybacks / Market Cap in % (RHS)Source: MSCI, FactSet, HSBC calculationsUniverseisbasedontheNorthAmericanconstituentsoftheMSCIACWIIMISour

27、ce: MSCI, FactSet, HSBC calculationsUniverse is based on the North American constituents of the MSCI ACWI IMIUK: trl 6. Europe incl. UK: 12M trl net buybackvolume400350300250200150100500199019941998200220062010201420185.0%3.0%1.0%0.0%500-50-150-200-250-300199019941998200220062010201420181.0%0.5%0.0%

28、-0.5%-1.0%-1.5%-2.0%-2.5%-3.0%-3.5%Gross Buyback Volume in USDbn (LHS)Gross Buybacks / Market Cap in % (RHS)Net Buyback Volume in USDbn (LHS)Net Buybacks / Market Cap in % (RHS)Source: MSCI, FactSet, HSBC calculationsUniverseisbasedontheEurope/UKconstituentsofthe MSCIACWIIMISource: MSCI, FactSet, HS

29、BC calculationsUniverse is based on the Europe/UK constituents of the MSCI ACWI IMIBuyback stock screensWe highlight three stock screens to play the buybackthemeThe screens draw on HSBCs buyback stock-selection model, our total shareholder yield approach, and on expected gross buybacks supported by

30、strong FCFyieldsStock lists are provided for both a global universe and with a European incl. UKfocusWe highlight three different screens with both a global and European focusScreening criteriaScreen (1): 50 top-ranked stocks from our buyback screening modelGlobal screen: minimum market cap of USD5b

31、n (European screen:USD2bn)Global screen: global buyback model decile 1 or 2 (European screen: regional decile 1 or2)Global screen: 15 top names sorted by 12M trl net buyback yield from North America, 15 top names from Europe, and 20 top names from otherregionsPleaseseetheappendixon20to22foronthemeth

32、odologyScreen (2): Top 50 names from our total shareholder yield screenGlobal screen: minimum market cap of USD5bn (European screen:USD2bn)Non-financial stocksonly12M trl total shareholder yield and its three subcomponents net buyback yield, common dividend yield and debt reduction yield must all be

33、positiveTotal Shareholder Yield = (12M trl Common Dividends Paid + 12M trl Net Buyback Volume 12M trl Net Change in Total Debt) / Market CapToavoidvaluetrapsincaseofdecliningmarketcapinthedenominatorofallfourfactors, we require 6M DPS Revisions (FY1, FY2) to bepositiveFor more information on the ide

34、a behind total shareholder yield, please see our Buyback Special All-in-one: The case for total shareholder yield, 12 December 2017.Screen (3): Top 50 global cash-flow generating net buybackersGlobal screen: minimum market cap of USD5bn (European screen:USD2bn)Non-financial stocksonlyBuybacks conduc

35、ted in the recent past and expected to be continued in a significant way: 12M trl net buyback yield 0% and 12M fwd gross buyback yield 2%Supportive free cash-flow generation: 12M fwd FCF Yield 12M trl FCF Yield =5%European screen: 12M trl net buyback yield 0%, 12M fwd gross buyback yield 0%, 12M fwd

36、 FCF Yield 12M trl FCF Yield 0%50 top-ranked stocks from HSBCs global buyback model (market cap USD5bn, market data as of 09 Dec2019)*12M trl NetRank Company NameTickerRank Company NameTickerMarketGICS L1 Sector(in USDm)Price (local)P/E(in %)Yield (in %)ScoreNorth America1 Dell Technologies CDELL US

37、United StatesIT34,53047.65 USD7.0 x0.037.957.42 Devon EnergyDVN USUnited StatesEnergy8,95923.15 USD16.7x1.529.065.53 Thomson ReutersTRI USUnited StatesIndustrials35,44870.9 USD37.7x2.027.243.64 Liberty-A-SiriusXMLSXMA USUnited StatesCommunication26,74147.42 USD20.5x0.021.737.65 DaVitaDVA USUnited St

38、atesHealth Care9,35372.11 USD13.1x0.019.056.16 eBayEBAY USUnited StatesConsumer Disc.28,12434.57 USD12.0 x1.618.560.07 Johnson Controls Inter.JCI USUnited StatesIndustrials32,40042 USD16.1x2.617.564.68 ComericaCMA USUnited StatesFinancials10,19970.75 USD9.9x3.817.046.99 WatersWAT USUnited StatesHeal

39、th Care14,603226.63 USD23.3x0.016.350.410 OracleORCL USUnited StatesIT181,55655.31 USD13.7x1.716.048.711 DXC TechnologyDXC USUnited StatesIT9,30836.36 USD6.3x2.316.055.012 LyondellBasell Inds NVLYB USUnited StatesMaterials30,68092.02 USD8.0 x4.515.650.513 EvergyEVRG USUnited StatesUtilities14,66062.

40、26 USD19.9x14 NRG EnergyNRG USUnited StatesUtilities9,70138.56 USD8.7x0.315.172.515 E*TRADE FinancialETFC USUnited StatesFinancials10,28845.54 USD12.9x1.214.059.9Europe1 WhitbreadWTB LNUKConsumer Disc.8,14246.29 GBP20.6x2 AccionaANA SMSpainUtilities5,59092.05 EUR18.0 x4.035.245.43 Akzo NobelAKZOF US

41、NetherlandsMaterials20,08289.69 EUR21.9x2.124.751.74 Standard Life AberdeenSLFPF USUKFinancials9,5703.103 GBP16.0 x7.021.343.25 RepsolREP SMSpainEnergy24,44814.46 EUR7.8x6.69.660.06 BarclaysBARC LNUKFinancials39,1041.7168 GBP7.4x5.27.332.77 GlencoreGLEN LNUKMaterials38,4132.1915 GBP11.8x6.96.850.68

42、Royal Ahold DelhaizeAD NANetherlandsConsumer Staples28,63423.5 EUR13.5x3.26.744.09 Flutter EntertainmentPPB LNUKConsumer Disc.8,93786.8 GBP26.3x2.36.736.510 Rio TintoRIO LNUKMaterials70,31342.565 GBP9.9x8.15.646.511 British LandBLND LNUKReal Estate7,4246.09 GBP18.1x12 AllianzALV GRGermanyFinancials9

43、9,747216 EUR10.7x4.44.946.413 BHP GroupBHPBF USUKMaterials47,65617.152 GBP11.9x6.04.837.014 Ashtead GroupAHT LNUKIndustrials14,16323.66 GBP11.0 x1.94.748.315 Royal Dutch Shell BRDSB LNUKEnergy225,30821.58 GBP11.0 x6.74.637.3Rest of the world1 Nomura Research Inst4307 JPJapanIT13,6832322 JPY22.3x1.31

44、2.945.72 Daito Trust Construction1878 JPJapanReal Estate9,40813510 JPY10.2x4.79.366.33 Isuzu Motors7202 JPJapanConsumer Disc.10,2381310.5 JPY9.5x2.98.345.74 WiproWPRO INIndiaIT19,330240.4 INR13.8x1.17.951.25 NTT DoCoMo9437 JPJapanCommunication92,0832998.5 JPY16.2x4.07.357.06 LUKOILLKOH RMRussiaEnerg

45、y69,4256182 RUB7.0 x6.37.361.57 Qantas AirwaysQAN AUAustraliaIndustrials7,3837.25 AUD11.3x3.66.949.08 SoftBank Group9984 JPJapanCommunication82,8964308 JPY13.1x1.06.854.09 Nippon Telegraph9432 JPJapanCommunication100,2815584 JPY11.7x3.46.549.710 EcopetrolECOPETL CBColombiaEnergy39,4743280 COP11.1x6.

46、55.435.211 JXTG Holdings5020 JPJapanEnergy14,863499.7 JPY7.9x4.45.045.612 Mitsubishi UFJ Financial Group8306 JPJapanFinancials73,936587.5 JPY8.1x4.35.045.113 BoschBOS INIndiaConsumer Disc.6,31615214.1 INR30.3x0.74.730.614 Rio TintoRIO AUAustraliaMaterials24,70297.42 AUD11.9x6.94.634.215 Nomura Holdi

47、ngs8604 JPJapanFinancials18,062561.5 JPY9.7x3.84.546.816 Olympus7733 JPJapanHealth Care20,3291610.5 JPY27.8x0.64.543.717 BHP GroupBHP AUAustraliaMaterials76,56338.05 AUD13.8x18 Z Holdings4689 JPJapanCommunication16,740377 JPY19.6x19 TAISEI Corp1801 JPJapanIndustrials9,4384565 JPY8.2x2.83.941.320 Dai

48、wa Securities Group8601 JPJapanFinancials8,620550.9 JPY12.5x3.83.933.1Market Cap12M fwdFY1 DYBuyback Total ModelSource: MSCI, FactSet, HSBC calculations*Filter criteria: at least USD5bn market cap, global buyback model decile 1 or 2, sorted in descending order by 12M trl net buyback yieldTop 50 stoc

49、ks from the global total shareholder yield screen (market cap USD5bn, market data as of 09 Dec2019)*12M trlTotal 12M trl Net12M trlCommon 12M trl Debt6M DPSBloombergMarket CapShareholderBuybackDividendReduction Rev (FY1,Rank Company NameTickerMarketGICS L1 (in USDm) Price (local) Yield (in %) Yield

50、(in %) Yield (in %) Yield (in %)FY2)1 Toshiba Corporation6502 JPJapanIndustrials15,6693740 JPY50.534.61.514.519.3%2 Whitbread PLCWTB LNUKConsumer Disc.8,14246.29 GBP44.71.0%3 Johnson Controls Int.JCI USUSAIndustrials32,40042 USD10.90.6%4 eBay Inc.EBAY USUSAConsumer Disc.28,12434.57 USD5.31.5%5 Whirl

51、pool CorporationWHR USUSAConsumer Disc.9,241146.22 USD15.80.7%6 Oracle CorporationORCL USUSAIT181,55655.31 USD19.716.01.62.00.9%7 Seagate Technology PLCSTX USUSAIT15,00657.12 USD4.62.6%8 HP Inc.HPQ USUSAIT30,33520.47 USD4.74.9%9 Jacobs Engineering GroupJEC USUSAIndustrials11,43885.84 USD8.615.3%10 L

52、UKOIL PJSCLKOH RMRussiaEnergy69,4256182 RUB2.7120.5%11 Royal Ahold Delhaize N.V.AD NANetherlandsConsumer Staples28,63423.5 EUR3.50.8%12 Hon Hai Precision Industry2317 TTTaiwanIT41,40091 TWD6.07.2%13 Cabot Oil & Gas CorporationCOG USUSAEnergy6,57216.11 USD1.19.3%14 Reliance Steel & AluminumRS USUSAMa

53、terials8,035120.54 USD5.73.0%15 Amgen Inc.AMGN USUSAHealth Care138,338232.82 USD3.70.9%16 Suncor Energy Inc.SU CNCanadaEnergy48,80342 CAD1.93.2%17 TAISEI CORP1801 JPJapanIndustrials9,4384565 JPY3.33.8%18 Taylor Wimpey plcTW/ LNUKConsumer Disc.7,6711.778 GBP0.17.1%19 Eastman Chemical CompanyEMN USUSA

54、Materials10,52677.41 USD3.30.8%20 Inter RAO UES PJSCIRAO RMRussiaUtilities7,4284.53 RUB2.21.2%21 NortonLifeLock Inc.SYM GRUSAIT15,83025.4 USD3.955.6%22 Delta Air Lines, Inc.DAL USUSAIndustrials36,08855.8 USD9.04.2%23 AbbVie, Inc.ABBV USUSAHealth Care127,82986.44 USD9.01.8%24 Williams-Sonoma, Inc.WSM

55、 USUSAConsumer Disc.5,42069.84 USD2.42.4%25 Hellenic TelecommunicationsHTO GAGreeceCommunication7,07113.31 EUR3.64.6%26 ConocoPhillipsCOP USUSAEnergy67,84461.83 USD0.123.9%27 GALP Energia SGPS SAGALP PLPortugalEnergy13,31914.51 EUR7.32.0%28 Novartis AGNOVN VXSwitzerlandHealth Care233,16291.18 CHF1.5

56、0.7%29 Fujitsu Limited6702 JPJapanIT19,18410065 JPY4.81.9%30 Universal Health ServicesUHS USUSAHealth Care12,588143.72 USD0.783.3%31 Chevron CorporationCVX USUSAEnergy221,799117.3 USD1.60.5%32 Leidos Holdings, Inc.LDOS USUSAIT12,75590.1 USD0.35.9%33 W.W. Grainger, Inc.GWW USUSAIndustrials17,469324.3

57、1 USD0.31.5%34Almarai Co. Ltd.ALMARAI AB Saudi Arabia Consumer Staples13,33350SAR3.77.4%35 Petronas Gas Bhd.PTG MKMalaysiaUtilities7,41815.6MYR0.53.9%36 Target CorporationTGT USUSAConsumer Disc.64,077 126.45 USD0.91.7%37 Tech Mahindra LimitedTECHM INIndiaIT10,196 750.55 INR0.30.7%38 Arkema SAAKE FPF

58、ranceMaterials8,16896.3EUR1.71.5%39 Colruyt GroupCOLR BBBelgiumConsumer Staples7,22847.3EUR1.51.3%40 Sabre Corp.SABR USUSAIT6,143 22.43 USD0.917.8%41 Canadian Pacific RailwayCP CNCanadaIndustrials33,671 245.36 USD0.211.6%42 USS Co., Ltd.4732 JPJapanConsumer Disc.6,1002115JPY0.17.1%43 Raytheon Compan

59、yRTN USUSAIndustrials60,299 216.53 USD0.50.5%44 Columbia Sportswear Comp.COLM USUSAConsumer Disc.6,206 91.91 USD0.11.9%45 Ross Stores, Inc.ROST USUSAConsumer Disc.41,621 115.06 USD4.13.0%46 Astellas Pharma Inc.4503 JPJapanHealth Care32,6271876JPY4.01.72.00.22.4%47 Yara International ASAYAR NONorwayM

60、aterials10,270 344.7 NOK1.716.0%48 Coca-Cola HBC AGCCH LNUKConsumer Staples12,000 25.11 GBP0.22.5%49 Hormel Foods CorporationHRL USUSAConsumer Staples24,221 45.36 USD1.62.4%50 Curtiss-Wright CorporationCW USUSAIndustrials6,016 140.92 USD0.96.7%Source: MSCI, FactSet, HSBC calculations*Filter criteria