Robinhood Traders Step Into Void Left by Dearth of Buybacks
- Net corporate-demand seen tumbling 80% this year amid pandemic
- Households, foreigners may become top buyers of U.S. stocks
When people wondered in March who would make up for the buying power lost in the stock market when companies stopped doing buybacks, “small-time day traders” wasn’t the answer that popped most readily to mind. But that’s what’s happening.
As American companies retreat from buying their own shares to preserve cash during the coronavirus pandemic, retail investors are stepping in, lured by a flood of economic stimulus. While net corporate demand is likely to plunge 80% to $100 billion this year as repurchases slow and share offerings increase, the decline is being partly offset by a roughly $270 billion increase in demand from households, according to Goldman Sachs Group Inc. Foreign investors are also a much bigger force in 2020, the bank says.