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.
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.
