Solactive AG has launched the Solactive Japanese Buyback Index (BUYJP Index), first of its kind in the market, which will be used as underlying by Société Générale Corporate & Investment Banking for swaps, options, warrants and certificates.
Buyback is defined as the purchase of its outstanding shares by a company. It is well-known as an alternative way for companies to ‘return’ cash to their shareholders by increasing earnings per share, used first in the US and more and more in other countries as well. By repurchasing some shares, companies officials, regarded as having superior information, state that they consider the current shares available in the open market as undervalued. Scientific research found outperformance patterns in a period of time from two months to two years after a buyback was announced.
Henning Kahre, Head of Equity Indexing at Solactive, said: “We’re excited to be partnering once again with SG CIB for the launch of the Solactive Japanese Buyback Index, as we have seen a growing demand from the market for this concept outside of the US without any existing products to answer the need so far.”
Stéphane Mattatia, Head of Global Equity Flow Engineering in Paris at SG CIB, said: “The Solactive European Buyback Index was very well received by investors as it answers a need for diversification of the sources of alpha. This new Index is adapted to the growing interest of investors for Japan – knowing furthermore that in a recent note, SG Research highlights that the combination of US recovery and Japan’s exit from the deflationary cycle should create a favorable environment for buyback there.”