Since US Federal Reserve reduced interest rates to zero level and purchased assets, worth $4 trillion, US corporations have taken up strategies of buy backs, higher dividends and debt fuelled mergers and acquisition to improve shareholder return.
According to data from financial accounts of United States, US corporations has been major buyer of US equities for last few years. In 2012 and 2013, corporations bought $370 billion worth of equities each year, which went further up to $396 billion in 2014 and according US investment bank Goldman Sachs, set to balloon this year at $542 billion, surpassing combined purchase of ETFs, mutual funds, life insurance and foreign investors.
So the real question is, with US Federal Reserve set to hike rates, will this trend reverse?
That is a NO for an answer, according to Goldman analysts. According to the banks' estimate, 2016 could be another year of block buster year for US equities inflow.
Corporations are estimated to pump in $450 billion in 2016, while flow from ETFs, mutual funds and Life insurance to pump in almost $100 billion more than what they did in 2014.
However, this sizable inflow doesn't ensure that equities provide block buster return next year, however it ensures some support.
S&P500, in spite of all that inflow is down -1% for the year, however it is relatively better performer considering the stronger Dollar and approaching hike from FED.


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