The share buyback business is booming in Europe. This is good news for the equity market, if the US experience is anything to go by.

Studies by Schroder Salomon Smith Barney show US companies that announced 5,920 open market share repurchase programmes over the past decade enjoyed average risk-adjusted excess returns greater than 6.5% relative to the market for the six-month period after the announcement. Companies declaring their buyback intentions within one month after market corrections outperformed the market by more than 14.1% for the six-month period after issuing the news, says Laura Bottega, an SSSB analyst.