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Signs of caution as directors sell options-related shares

China Overseas Land, China Overseas Grand Oceans and TC Orient had largest sales by value

PUBLISHED : Monday, 12 November, 2012, 12:00am
UPDATED : Monday, 12 November, 2012, 7:12am

Directors remained cautious following the steep fall in the market with their buying contracting for the third straight week and the selling rising sharply last week, based on filings to the stock exchange from November 5 to 9.

Sellers outweighed buyers in the number of trades and value.

Fourteen companies recorded 75 disposals worth HK$103.5 million, against 18 firms with 65 purchases worth HK$69 million. The sales were up from the previous week's 11 companies, 58 disposals and HK$42.3 million.

On the buying side, the number of trades and value were down from the previous week's 73 deals worth HK$156.7 million.

Another sign of caution by directors is the high number of options-related sales. Options-related sales are semi-bearish signals as directors who are inclined to take quick profits would hold on to at least a portion of those shares if they expect their companies' share prices to rise further.

Four stocks in which directors sold all of the shares that they acquired through options were Sino-Ocean Land, New World China Land, mobile communications radio components manufacturer Mobi Development and MTR Corp. The deals were worth HK$21 million.

With sellers dominating trading, the bulk of the significant trades last week were disposals, with heavy insider sales in China Overseas Land & Investment, China Overseas Grand Oceans, and TC Orient Lighting. These three stocks, incidentally, recorded the largest sales in value last week.

The top sellers in terms of value were directors of China Overseas Land, with chief executive Hao Jianmin and executive director Dong Daping unloading a combined 2.5 million shares worth HK$52 million from October 31 to November 2 at an average of HK$20.86 per share. The sales were made on the back of a 41 per cent rise in the share price since May from HK$14.80.

The counter is also sharply up from October last year when it stood at HK$10.36.

Hao recorded his first on-market trade since September 2010 with two million shares sold on November 2 at HK$21.01 each, lowering his stake in the company by 37 per cent to 3.35 million shares or 0.04 per cent of the issued capital. He previously sold 900,000 shares in September 2010 at an average of HK$17.52 each and acquired 330,000 shares in July 2008 at HK$11.59 each.

Dong, on the other hand, unloaded 500,000 shares from October 31 to November 1 at an average HK$20.27 each, which lowered his stake by 94 per cent to 34,000 shares. Those are his first on-market trades since he joined the group in 2001.

The stock closed at HK$21.50 on Friday.

Hao picked up where he left off in property developer China Overseas Grand Oceans in September with one million shares sold on November 2 at HK$8.18 each. The trade reduced his holdings by 27 per cent to 2.75 million shares or 0.12 per cent. He previously sold 1.2 million shares on September 14 at HK$8.22 each.

The disposals since September are his first on-market sales since his appointment as chairman in May 2010. The sales were made following the share price rise since April from HK$5.59.

The disposals were made at a huge profit based on the 4.89 million shares he acquired from May 2010 to January last year at an average HK$2.36 each.

The stock closed at HK$7.76 on Friday.

Chairman Yeung Hoi-shan recorded his first on-market sales in LED lighting products and PCB manufacturer TC Orient Lighting since his appointment in 2006 with nearly nine million shares sold from November 6 to 8 at an average HK$1.10 each. His stake is now 151.1 million shares, or 34.15 per cent. The disposals were made on the back of an 86 per cent rebound in the share price since August from 59 HK cents.

Robert Halili is the managing director of Asia Insider