European Managers Shop for Stocks in Biggest Spree in Five Years

(Bloomberg) -- Investors may be selling off European equities, but corporate directors are using the slump to buy their companies’ stocks at bargain prices at a pace not seen in at least five years, according to Liberum.

Executives in Europe have been shopping for shares of their companies over the past four weeks, with the ratio of discretionary buys to sells in the Stoxx Europe 600 Index surging to the highest since at least 2015, Liberum and Bloomberg data show.

“We believe this to be a vote of confidence that the effects of COVID-19 on their companies will be short-lived, and current prices offer an attractive entry point,” Liberum analyst Andrew Coury said in a note.

Additionally, Liberum used Bloomberg data to find European firms that have fallen to levels within 10% of their five-year lows and whose directors bought stock over the last four weeks. Such companies include BASF SE, Renault SA and Societe Generale SA.

Fears over the spreading coronavirus and its economic damage have erased about 4 trillion euros ($4.3 trillion) from Stoxx 600 Index’s market value as the region now has more confirmed cases than China. Many major European companies, including Danone SA and Air France-KLM, have warned that the pandemic will hurt their earnings. The benchmark stock index is trading at 2013 lows.

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