The Insider
by

Directors in Hong Kong swing into action as stocks drop

PUBLISHED : Sunday, 10 January, 2016, 3:05pm
UPDATED : Sunday, 10 January, 2016, 3:08pm

The steep correction in the market resulted in another round of heavy buying and increase in selling by directors. A total of 50 companies recorded 269 purchases worth HK$352 million versus eight firms with 36 disposals worth HK$293 million based on filings on the exchange in the first week of January.

The number of companies and trades were consistent with the previous week’s four-day totals of 43 firms and 230 purchases on the buying side and 13 companies and 41 disposals on the selling side. The turnover, on the other hand, was sharply up from the previous week’s HK$193 million worth of purchases and HK$179 million in disposals.

Meanwhile, the fall in the market resulted in a significant rise in the buyback activity, with 35 companies posting 196 transactions worth HK$1.2 billion. The figures were sharply up from the previous week’s 18 firms, 72 trades and HK$979 million.

Companies and directors moved into price support following the sharp fall in the market with buybacks in NetDragon Websoft Inc and Sino Land and insider buys in Real Nutriceutical Group and Kangda International.

READ MORE: Share buy-backs dominate market in 2015

Online game developer NetDragon Websoft recorded its first buybacks since January 2015 with 681,000 shares purchased from January 6 to 8 at an average of HK$19.95 each. The trades, which accounted for 10 per cent of the stock’s trading volume, were made on the back of the 29 per cent drop in the share price since November 2015 from HK$28.10. The counter is also sharply down since May 2015 from HK$39.90.

Although the Group resumed buying back following the steep fall in its share price, the repurchases were made at higher than its previous acquisition prices based on the 62.2 million shares that the company acquired from September 2008 to January 2015 at HK$2.33 to HK$18.60 each or an average of HK$8.85 each. Investors should note that the stock rose by an average of 29 per cent six months after the group bought shares based on 71 filings since 2008. The stock recorded a price gain six months after on 51 per cent of those filings. The stock closed at HK$20.20 on Friday.

Property developer Sino Land recorded its first buyback since July 2015 with 814,000 shares purchased on January 8 at HK$10.71 each. The trade was made on the back of the 18 per cent drop in the share price since October 2015 from HK$12.98. The group previously acquired 2.57 million shares from April to July 2015 at an average of HK$12.38 each and 522 million shares from January 1995 to December 2014 at HK$1.95 to HK$24.45 each, or an average of HK$8.91 each.

READ MORE: Evergrande Real Estate’s latest buybacks take total for year to HK$9.45 billion

Investors should note that Chairman Robert Ng purchased 3.63 million shares from February to November 2015 at an average of HK$11.67 each. The trades increased his holdings to 3.248 billion shares, or 53.38 per cent of the issued capital. Prior to his purchases last year, the chairman acquired 3.34 million shares from April 2013 to December 2014 at an average of HK$12.41 each and 1.07 million shares in September 2011 at HK$12.24 each. The stock closed at HK$10.66 on Friday.

Chairman and CEO Wang Fu Cai recorded his first on-market trades in health and nutritional supplements and pharmaceutical products manufacturer Real Nutriceutical Group since the stock was listed in February 2010 with 13 million shares purchased from December 28 to January 6 at HK$0.86 to HK$0.75, each or an average of HK$0.80.

The trades increased his holdings by 5 per cent to 276.968 million shares, or 17.31 per cent of the issued capital. The acquisitions were made after the stock fell by up to 77 per cent from HK$3.30 in June 2015. The counter is also sharply down since February 2011 from HK$6.53. The counter closed at HK$0.72 on Friday.

Chairman and founder Zhao Juan Xian resumed buying shares of wastewater treatment facilities investor and operator Kangda International Environmental Company at a lower price with 2 million shares purchased on January 4 at HK$1.84 each. The trade increased his holdings to 1.119 billion shares, or 54.16 per cent of the issued capital. The acquisition was made on the back of the 31 per cent drop in the share price since October 2015 from HK$2.66.

He previously acquired 2 million shares from August to September 2015 at an average of HK$2.06 each and 900,000 shares in March 2015 at HK$3.37 each. The purchases by Zhao since March 2015 are the first on-market trades by a director of the company since the stock was listed in July 2014. The chairman’s last purchase price was lower than the IPO price of HK$2.80. The stock closed at HK$1.82 on Friday.