The management team of a company has much more insights into the value and future performance of the company than ordinary investors, or even institutional investors. This is why share buybacks are usually seen a positive signal in the market that the company’s management think that investors are underpricing their shares.
Most companies have a share buyback mandate – this is the number of shares it can repurchase within the year, as approved by shareholders at its Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM). The share buyback mandate of a company is just a guideline for the maximum number of shares they can repurchase (usually capped at 10% of the total number of shares of a company).
In August 2018, Singapore Exchange (SGX) listed stocks bought back $245 million worth of their own shares. This was more than double the $109 million worth of shares they bought back in July 2018, and four times the $60 million they bought back a year ago in August 2017.
Here are the four stocks that have repurchased the most amount of its shares in August.
#1 DBS Group Holdings Ltd (SGX: D05)
DBS bought back nearly 6.0 million of its own shares worth $150.8 million in August 2018. In total, it has bought back 6.8 million shares from the market to-date – making its August 2018 buyback a substantial investment in its own shares.
In its share buyback mandate, DBS can repurchase up to 51.3 million shares. This means its August buyback alone was nearly 10% of its entire mandate.
Despite its share buyback efforts, DBS’ share price fell close to 7.4%. Trading at $24.32 on Friday (7 September 2018), DBS share price has fell a further 2.5% in the past week.
#2 CapitaLand Limited (SGX: C31)
CapitaLand bought back close to 9.0 million of its own shares worth $30.3 million in August 2018. In the year-to-date, it has bought back close to 38.1 million of its own shares, or close to 45.3% of the number of shares it is approved to buy in its share mandate.
Unlike DBS, CapitaLand’s shares improved 7.5% in August. With its shares trading at $3.27 on Friday (7 September 2018), it has lost nearly 4.9% of that gain in the first week of September 2018.
#3 United Overseas Bank Ltd (SGX: U11)
UOB bought back 1.1 million of its own shares worth close to $29.3 million in August 2018. In total, it has repurchased 4.1 million shares to-date, comprising 5.0% of its total share mandate.
In August 2018, UOB shares lost 1.0% of its value. Trading at $26.15, As at Friday (7 September 2018), UOB’s shares has lost a further 3.4% in the first week of September.
#4 Oversea-Chinese Banking Corp Limited (SGX: O39)
All three banks ranked within the top four companies that repurchased most amount of its shares in August 2018.
OCBC bought back 900,000 shares worth $10.4 million in August 2018. This is less than 0.5% of its share mandate. In total, it has repurchased 5.5 million shares to-date.
Similar to the other banks, its shares declined nearly 2.6% in August 2018. Trading at $11.06 on Friday (7 September 2018), OCBC’s shares has given up a further 2.1% in the first week of September.
If you are interested to read more about Singapore stocks, you can check out our extensive archive of articles of 4 Stocks This Week. To stay up to date with the latest news on the Singapore Exchange, you also can check out the SGX My Gateway Market Updates to get more insights.
Stay Up-To-Date With The Market
One easy way to stay updated with market news, price trends and financial information is to utilise stock investing and charting tools. If you’d like to try a stock investing and charting tool, DollarsAndSense has partnered with ShareInvestor WebPro to give you a headstart with a 3-months complimentary Dow Jones Market Talk subscription (worth over $30) and a free 8 GB memory drive today.
On the ShareInvestor WebPro investing and charting tool, you will receive a full suite of fundamental and technical data on stocks listed on the SGX as well as Malaysia, Hong Kong, Indonesia, US, Thailand and Australia. In addition, you can find detailed financial reports, news stories, financial ratios and utilise charting tools to aid in your stock analysis.
4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.
DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.
Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.
If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.