Directors extend share-buying binge as sales rebound

Stock buyback activity among listed firms also surges in sixth straight week of shopping spree

PUBLISHED : Monday, 08 April, 2013, 12:00am
UPDATED : Monday, 08 April, 2013, 3:17am

Buying rose for the sixth straight week and selling among directors rebounded, based on filings to the stock exchange during the holiday-shortened week of April 2 to 5. The number of filings was high during the three-day trading week, with 25 firms recording 98 purchases worth HK$679 million versus nine firms with 26 disposals worth HK$42 million. The number of firms and value on the buying side were up from the previous week's four-day total of 23 companies and HK$504 million, while the number of purchases was only four trades shy of the previous week's 102 acquisitions. On the selling side, the number of trades and value were up from the previous week's 20 disposals, worth HK$14.7 million.

Aside from directors, buyback activity among listed firms surged, with 14 companies making 50 repurchases worth HK$736 million. The number of firms and value were up from the previous week's 11 companies and HK$668 million, while the number of trades was consistent with the previous week's 64 repurchases.

The heavy insider buying and buybacks of the past six weeks will likely continue, as the market plunged on Friday due to fears of avian flu on the mainland. Blue chips CLP Holdings and Tencent Holdings, which in the past month have seen more than $2.14 billion and $898 million of director and buyback purchases, respectively, fell with the market on Friday and are likely to see strong price support in the near term.

Another blue chip that has seen heavy buying in the past month is property developer Henderson Land Development. Its chairman, Lee Shau-kee, purchased 6.63 million shares worth HK$350 million between March 26 and March 28 at an average price of HK$52.84 each. The trades, which accounted for 26 per cent of the stock's trading volume, increased the tycoon's holdings to 1.520 billion shares, or 62.96 per cent of the developer's issued capital. He made his acquisitions on the back of an 11 per cent drop in Henderson's share price since January, from HK$59.35. Those purchases also came after the company announced a 17.6 per cent rise in year-end profit to HK$20.208 billion on March 25. Lee had previously acquired 131.2 million shares worth HK$6.18 billion between April 2008 and September 2012, at HK$28.31 to HK$58.25 per share - an average of HK$47.09 each.

Since 1993, Henderson's stock has risen by an average of 10 per cent in the three months after each of Lee's purchases, based on 771 trades. The stock was higher three months after two-thirds of those purchases.

Aside from Lee, non-executive director Timpson Chung Shui Ming recorded his first trade since his appointment in November 2012, buying 50,000 shares on March 27 at HK$53.45 each. The stock closed at HK$53.05 on Friday.

Another property stock that saw brisk trade last week is that of property broker Midland Realty, whose chairman, Freddie Wong Kin Yip, picked up 2.15 million shares from March 26 to 27 at an average price of HK$3.31. Those trades raised his holdings to 73.675 million shares, or 10.26 per cent, and followed a 21 per cent drop in the firm's share price since January, from HK$4.19. The stock is also sharply down since October 2012, from HK$5.00.

Wong had previously bought 20.5 million shares between May and June 2012 at an average price of HK$3.79 each, and 23.4 million shares from October to December 2008 at an average of HK$2.46 each. The stock closed at HK$3.37 on Friday.

Among the directors selling before the market slumped on Friday was Chau Kwok Keung, chief financial officer of Comtec Solar Systems, disposing of 1.23 million shares on March 28 at HK$1.28 each. His sale came on the back of a 35 per cent drop in the firm's share price since January, from HK$1.98, and after a year-end loss of 165.04 million yuan, more than three times the previous year's loss.