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Investing.com -- France’s proposed hike to its buyback tax has weighed on domestic stocks, yet Barclays strategists see a possible turning point as the measure moves to a more business-friendly Senate.
The bank says the market impact so far has been meaningful, but the final outcome could ultimately offer relief if the most punitive measures are rolled back.
The proposed increase to a 33% levy on share repurchases was approved in the government’s 2026 budget proposal, putting significant pressure on French buyback names relative to peers.
Barclays highlighted more than a dozen companies with recent buyback executions and outstanding programmes, including Michelin, Airbus, Dassault Aviation, Saint-Gobain, Thales, Vinci, Derichebourg, Elis, Bic, Accor, and TotalEnergies, among others.
However, the measure is now under Senate review. Barclays strategists, led by Emmanuel Makonga, point out that the upper house has been “generally more pro-business” and recently voted down the proposed corporate surtax.
"The measure could be scrapped, offering potential relief to affected companies," they wrote. The Senate has until December 15 to finalise the budget.
If the Senate outcome proves “less restrictive than initially feared,” French companies caught in the selloff may benefit, strategists noted.
The broader European backdrop remains constructive, strategists said. Buyback momentum has remained strong, with November executions near multi-year highs and repurchases accounting for a sizable share of equity trading volumes. The activity was led by Financials, Energy, and Industirals.
Repurchases made up 2.3% of total European equity trading volume, reinforcing their role as a major source of liquidity. New announcements were also strong at 18 billion euros, again driven chiefly by Financials and Energy.
Barclays’ probability model projects around 50 billion euros in new buyback announcements in early 2026, supported by ample corporate cash cushions, easing interest costs, and an anticipated earnings inflection next year.
Together with the fact that roughly 70% of 2026 programmes remain unexecuted, strategists see continued capacity for buybacks “to remain a major European equity theme into 2026.”