The Insider
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Stock buying by directors surges in Hong Kong as selling falls

PUBLISHED : Sunday, 22 May, 2016, 7:45pm
UPDATED : Monday, 16 January, 2017, 10:28am

Buying by directors continued to remain high while sales declined, based on exchange filings for the third week of May. Buyers outweighed sellers, with 41 companies recording 199 purchases worth HK$156 million versus 10 firms with 37 disposals worth HK$67 million.

The number of companies and trades on the buying side were slightly up from the previous week’s 39 firms and 191 purchases. The buy value, however, was sharply down from the previous week’s acquisitions worth HK$360 million. On the sell side, the number of companies and trades were down from the previous week’s 12 firms and 51 disposals. The sell value, however, was up from the previous week’s sales worth HK$54 million.

Aside from directors, buy-back activity remained high with 23 companies that posted 118 repurchases worth HK$240 million. The number of firms and trades were consistent with the previous week’s 25 companies and 120 transactions. The value, however, was sharply down from the previous week’s turnover of HK$555 million.

Multiple buyers in a stock are often strong signals that a counter is undervalued. Three stocks that had multiple buyers last week are Cabbeen Fashion, IGG and UMP Healthcare Holdings.

CEO Ng Siu-kKeung and vice-president Wei Qiang moved in to support the share price of casual menswear designer and retailer Cabbeen Fashion with a combined 935,000 shares purchased from May 9 to 11 at an average of HK$2.71 each. The trades, which accounted for 36 per cent of the stock’s trading volume, were made on the back of the 34 per cent drop in share price since March from HK$4.10. The counter is also sharply down since August 2015 from HK$6.21.

Ng recorded his first trade since May 2014 with the purchase of 835,000 shares between May 10 and 11 at HK$2.71 each. The trades increased his holdings by 28 per cent to 3.826 million shares, or 0.54 per cent of the issued capital. He had earlier acquired 2.1 million shares in May 2014 at HK$2.35 each.

Wei, on the other hand, recorded his first trade since June 2015 with the purchase of 100,000 shares between May 9 and 11 at HK$2.68 each. The trades boosted his stake by 9 per cent to 1.203 million shares, or 0.17 per cent of the issued capital. He previously acquired 403,000 shares in June 2015 at HK$6.19 each. The stock closed at HK$3.07 on Friday.

Executive director Jiang Tianfan and independent non-executive directors Mike Yeung Wing-sun and John Lee Luen-wai recorded their first trades in healthcare solutions providers UMP since the stock was listed in November 2015 with a combined 2.534 million shares purchased from April 21 to May 18 at HK$1.24 to HK$1.42 each or an average of HK$1.35. The trades were made after the stock rebounded by as much as 42 per cent from HK$1 in February. Despite the rebound, the directors’ purchase prices were lower than the IPO prices of HK$1.92 to HK$2.20.

Also positive this year is executive director Michael Sun Man-kin who purchased 11.1 million shares from January 20 to 21 at HK$1.14 each, which increased his holdings by 739 per cent to 12.590 million shares, or 1.71 per cent. The stock closed at HK$1.47 on Friday.

There were heavy buybacks and a purchase by executive director Xu Yuan in online game developer and operator IGG with a combined 10.6 million shares purchased from May 9 to 20 at an average of HK$3.38 each. The trades accounted for 30 per cent of the stock’s trading volume. The company picked up where it left off in January with 9.1 million shares purchased from May 10 to 20 at an average of HK$3.37 each. The trades were made on the back of the 11 per cent rebound in the share price from HK$3.03. The group previously acquired 21.6 million shares from December 22 to January 13 this year at HK$3.13 to HK$3.61 each or an average of HK$3.44 each. The repurchases since December are the group’s first buybacks since the company moved its listing from GEM to the main board in March 2015.

Xu, on the other hand, purchased 1.48 million shares on May 9 at HK$3.43 each. The trade increased his holdings to 440.752 million shares or 31.95 per cent of the issued capital. It was also his first trade since his appointment in August 2015. The purchase was made on the back of the 35 per cent rebound in the share price since September 2015 from HK$2.54. Despite the rebound in the share price, the counter is still down since April 2015 from HK$6.89. The stock closed at HK$3.41 on Friday.

Robert Halili is managing director of Asia Insider