"There're green shoots and animal spirits," he said. "You can see that with M&A action picking up."
He expects the macro backdrop will stay stable enough to avoid being an impediment, while global bond yields at recession levels are likely to support companies trolling for acquisitions and share buybacks, leading to "de-equitization," or more shares being retired than created.
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"Large-cap M&A has picked up substantially, companies are raising capital via the debt market instead of the equity market and 21st Century Fox has delisted," he said in a note Wednesday. "Weak equity supply should be positive for index prices."
He forecasts as much as $2 billion worth of capitalization will de-equitize this year, compared with a net additional around $47 billion new Australian equity added every year since 2006.
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Credit Suisse forecasts around $9 billion worth of share buybacks this year, helped by lower debt costs, while it expects more than $22 billion worth of S&P/ASX 200 acquisitions will be completed this year. It also expects the delisting of 21st Century Fox shrank the index's share count by around $9 billion and the funds will need to be redeployed in the market.
It tips playing the theme via likely M&A targets, such as Myer and Beach Energy, and acquirers likely to make accretive deals, such as carsales.com.au and TPG Telecom, and also companies likely to make earnings-per-share enhancing share buybacks, such as CSL.