AFP, Paris :
Massive dividend payments and mega mergers: with markets flush with central bank easy money companies have begun to raid their war chests, gobbling up competitors or rewarding investors.
In the first quarter of this year dividend payments jumped by nearly a third and several titanic tie-ups were announced, with the United States in the forefront.
Global growth remains sluggish, but its return is sufficient “as all over the markets there is liquidity waiting to be used as everything has been done to stimulate them, especially by the US Federal Reserve and Bank of Japan,” said Renaud Murail, a portfolio manager at Barclays Bourse in Paris.
The US, Japanese and British central banks have conducted massive purchases of assets in recent years in order to inject liquidity in the markets and jump-start stalled economies.
On top of this central bank liquidity there are the funds “accumulated by European companies as a precaution after the liquidity crunches they experienced in 2008 and 2011,” said Romain Boscher, global head of equities at asset manager Amundi.
With the global economic crisis receding and eurozone tensions disapating, companies are no longer hoarding cash and the amount they have been paying out to investors has soared.
Globally, it jumped by 31.4 percent in the first quarter of this year compared with the same three month period in 2013, according to a study by Henderson Global Investors.
