LONDON: An unrelenting squeeze on the supply of global shares and sovereign bonds shows little sign of easing next year, with companies and central banks predicted to be big buyers of these securities in direct competition with investors.
On bonds meanwhile, government borrowing is at record levels, but much of it is heading straight into central bank bond-buying programmes. Central banks now hold around half the sovereign bonds in Britain, the euro zone and Japan. Buybacks, often blamed for draining equity supply, were constrained this year by regulators and by companies' own capital needs. US July-September buybacks were some 42 per cent below year-ago levels, S&P Dow Jones Indices data shows.
"Positive equity returns and sheer market momentum are pulling in more and more people," Saxo Bank head of equity strategy Peter Garnry said, noting his bank's direct client numbers had surged this year to record highs.Opinions vary on how much uplift these factors offer to markets. Panigirtzoglou said the last time there was such a large demand/supply gap in 2018, world stocks rose 25 per cent.
Citi analysts said this means that the volume of bonds available to investors across major developed economies will not grow at all next year.