In the year to-date, the Straits Times Index (STI) has increased by 1.4%. This is marginally better than how many major global country indexes have performed – Hong Kong’s Hang Seng Index (HSI) has increased 0.2%; London’s Financial Times Stock Exchange 100 (FTSE 100) decreased 7.6%; and USA’s Standard & Poor’s 500 (S&P 500) has increased 0.7%.
Also, this comes on the back of heightened volatility in equity markets, with many correcting by has high as over 10% in early February before recovering later in the month. This may have offered companies a chance to act on their share buyback mandates, to purchase outstanding shares on the open market.
In February, managers of 17 companies spent close to $134.2 million buying back 26.4 million shares from the market. This is the most companies have bought back from the markets in the last 20 months.
Companies may have opted to act on their share buyback mandates during the close to 10% correction in equity markets. The management teams of companies buy back their company shares for several main reasons – most of which are typically positive signals.
These managers typically have greater information about how the company is really functioning. This information is better than what the public usually possess, and thus when they buy back company shares, it is usually seen as a strong signal that the company is on a strong footing.
During market corrections or times when companies come under intense scrutiny, managers could buy back company shares to signal that they are still bullish on their companies’ future performance. Also, if managers think their companies’ fundamentals are better than what the market is pricing it at, it then provides a good opportunity to buy back shares “cheaply”.
One other reason managers buy back shares may be that they do not know what else to do with excess cash. This is perhaps not necessarily a good thing then – as managers it could be taken that the managers do not want to invest in the company or are unsure of what to do with their cash reserves.
#1 CapitaLand Limited (SGX: C31)
CapitaLand, a leading real estate developer with global footprint in developed and emerging global markets. Its portfolio of integrated property development includes shopping malls, serviced residences, offices and homes.
In February, CapitaLand bought back over $43.8 million worth of shares, translating to 12.1 million shares. In the year-to-date, CapitaLand has improved 0.3% to $3.59.
On 13 February 2018, CapitaLand announced that it bought Pearl Bank Apartments for $728 million, with an additional $201.4 million to be spent to top-up its lease to 99 years. It also announced its full year results for 2017, posting a 30.3% improvement in profit attributable to owners to $1.6 billion and a 12.2% decline in revenue to $4.6 billion.
#2 Keppel Corporation Limited (SGX: BN4)
Keppel Corp engages in offshore and marine, property and infrastructure, and investments business in Singapore and globally.
In February, Keppel Corp bought $39.3 million worth of shares, amounting to 4.7 million shares. In the year to-date, its share price has increased over 4.5% to $7.87.
On 25 January 2018, Keppel Corp released its FY2017 financial results, posting a 72.4% drop in net profit attributable to shareholders to $217.2 million and an 11.9% drop in revenue to $6.0 billion.
#3 Oversea-Chinese Banking Corporation Limited (SGX: O39)
OCBC claims to be the longest established Singapore banks, tracing its roots to 1912. OCBC bank and its subsidiaries offer a diverse array of commercial banking, specialist financial management services, ranging from consumer, corporate, investment, private and transactional banking to treasury, insurance, asset management and stock broking services. The bank operates in Singapore, Malaysia, Indonesia and Greater China, with 610 branches and offices.
In February, OCBC bought $18.4 million in its stocks from the open market, representing 1.4 million shares. Its share price in the year-to-date has increased 4.6% to $13.06.
On 14 February 2018, OCBC announced a 19% increase in net profit attributable to shareholders to $4.3 billion and an 11% increase in total income to $9.6 billion in its FY2017 results.
#4 United Overseas Bank Limited (SGX: U11)
UOB has a global network of more than 500 branches and offices in 19 territories in Asia Pacific, Europe and North America. The group provides a wide range of financial services globally through three core business segments – Retail, Group Wholesale Banking and Global Markets.
In February, UOB spent $11.3 million buying back 0.4 million shares. In the year-to-date, its share price has increased 4.2% to $27.75.
On 14 February 2018, UOB announced its FY2017 results, posting a 9% improvement in net profit to $3.4 billion on the back of a 10% increase in revenue to $8.9 billion.
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