SGX Market Updates

11 Companies Commence New Share Buyback Mandates in August


PUBLISHED ON |

01 September 2020

  • In August, 18 SGX primary-listed stocks bought back shares for a total consideration of S$15 million, higher than the S$3 million in consideration for July 2020, and seasonally lower than the S$70 million buyback consideration reported in August 2019.

  • STI constituents ST Engineering and Keppel Corporation led the buyback consideration in August. As many as 11 companies commenced new mandates, which included Keppel Corporation, AEM Holdings, First Resources and Straco Corporation.  

  • The STI booked its first price gain in August since 2006. Together, the SPDR® STI ETF and Nikko AM STI ETF saw net creations of S$704 million over the first eight months of 2020 as investors continued to accumulate units. The S$704 million is up 300% from total net creations of S$176 million for the entire 2019 year.




Total share buyback consideration for the month of August totaled S$15.1 million, up from S$2.9 million in July (see market update: Share Buyback Consideration in Jul 2020 at Modern Low as Earnings Take Centre Stage) and up from S$12.6 million in June (see market update: More than 80 Singapore Stocks Conducted Buybacks in 1H20). This has brought the total consideration of share buybacks for SGX primary-listed stocks to S$681 million for the first eight months of 2020, up from S$590 million in consideration for the entire calendar year of 2019. The S$681 million represents 0.08% of the combined S$815 billion in market capitalisation of all stocks listed on Singapore Exchange at the end of August.

The S$15.1 million in August buyback consideration coincided with a 0.1% price gain in the Straits Times Index (“STI”) to 2,532.51, the narrowest monthly price move by the STI since March 2019. Dividend distributions boost the STI total return in August to 1.1%. This was the also the first time since 2006, that the STI booked a price gain in the month of August. The total number of COVID-19 cases grew from 17 million at the end of July, to 25 million at the end of August, whilst the total mortality rate declined from 3.9% to 3.4%.

The STI’s 0.1% price gain in August saw its 10-day historical volatility again contained between 10% and 20% for the entire month. For context, on 15 June, the STI 10-day historical volatility reached as high as 34%, and as high as 80% on 25 March and 31 March.


SGX Buyback Consideration 2020



SGX Buyback Consideration

Source: SGX (Data as of 31 August 2020)



Together, the SPDR® STI ETF and Nikko AM STI ETF garnered net creations of S$704 million over the first eight months of 2020 as investors accumulated units amidst the market declines. The S$704 million is up 300% from the total net creations of S$176 million for the entire 2019 year. 

As many as 11 of the 18 companies commenced new buyback mandates in August - Keppel Corporation, AEM Holdings, First Resources, Straco Corporation, Avarga, China Sunsine Chemical Holdings, YHI International, HRnetGroup, MDR, Ban Leong Technologies and Intraco

The table below summarises the buyback considerations in August 2020. The table is sorted by the value of the total consideration amount for the month, which combines the amount of shares or units purchased and the purchasing price of the transactions.

Stocks Number of Shares/units
Authorised for Purchase
in Current Mandate
Total
Number of Shares/units
Purchased in
August 2020
Total Buyback Consideration
 (including stamp duties,
clearing changes etc.)
paid or payable
for the shares in
August 2020
Average
Price Paid
S$
Cumulative
Number of Shares/units
purchased in
Mandate to date
ST ENGINEERING 62,429,441 2,000,000 $6,834,114 $3.417 5,000,000
KEPPEL CORPORATION 36,410,340 1,120,600 $5,198,660 $4.639 1,120,600
GLOBAL INVESTMENTS 161,476,125 6,800,000 $933,582 $0.137 11,000,800
AEM HOLDINGS 27,331,270 145,000 $592,621 $4.087 145,000
FIRST RESOURCES 158,268,446 418,400 $545,419 $1.304 418,400
STRACO CORPORATION 86,213,958 550,000 $273,354 $0.497 550,000
SINGAPORE O&G 47,680,300 803,724 $196,268 $0.244 1,999,990
GKE CORPORATION 78,853,189 1,500,000 $118,742 $0.079 10,857,800
AVARGA 94,710,834 539,800 $81,101 $0.150 539,800
CHINA SUNSINE CHEMICAL HOLDINGS 97,226,160 210,000 $74,532 $0.355 210,000
YHI INTERNATIONAL 29,229,581 200,000 $65,077 $0.325 200,000
HRNETGROUP 100,652,263 128,700 $63,618 $0.494 128,700
EUROSPORTS GLOBAL 26,220,160 300,000 $49,787 $0.166 1,333,900
JAPAN FOODS HOLDING 17,360,290 100,000 $29,671 $0.297 235,700
MDR 89,039,757 300,900 $26,361 $0.088 300,900
BAN LEONG TECHNOLOGIES 11,392,300 62,500 $15,929 $0.255 62,500
CHOO CHIANG HOLDINGS 20,800,000 46,800 $9,862 $0.211 55,800
INTRACO 10,292,587 5,000 $1,253 $0.251 5,000
Total   15,231,424 $15,109,950  

Source: SGX (Data as of 31 August 2020) 



Share buyback transactions involve share issuers repurchasing some of their outstanding shares from shareholders through the open market. Once the shares are bought back, they can be converted into treasury shares, which means they are no longer categorised as shares outstanding. Motivations for share buybacks can include employee compensation plans (such as share option schemes or employee share purchase plans) or long term capital management. Buybacks can pick up amidst market declines that are driven by broader moves on international macroeconomic developments.

Share buyback information can be found on the company disclosure page on the SGX website, using the Announcement category and sub-category of Share Buy Back-On Market. As best practice, companies should refrain from buying back their shares during the two weeks immediately before its quarterly financial statements and one month immediately before the full-year financial statements.







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