Directors buy more of their own shares as selling drops

Buying of their own company's shares by directors rose last week and selling fell sharply, based on filings made with the stock exchange for the third week of October. A total of 32 companies reported 118 insider purchases worth HK$69.9 million, versus 12 companies that reported 53 disposals worth HK$36.6 million.

The buys were up from the previous week's 28 companies that reported 107 purchases worth HK$32.5 million, and sales were down from the previous week's 15 companies that reported 90 disposals valued at HK$65.8 million.

Buyback activity fell, with 10 companies reporting 41 repurchases worth HK$19.4 million versus the previous week's 14 companies that reported 58 purchases worth HK$91.2 million. The bulk of the significant purchases were in Wheelock & Co, Dah Sing Financial, Xinyi Glass Holdings, and recently listed Merry Garden Holdings.

Chairman Peter Woo Kwong-ching paid his highest acquisition price for shares in property developer Wheelock & Co since he started buying in August last year, with 220,000 shares bought on October 11 at HK$33.98 each. The trade increased his holdings to 1.22 billion shares, or 60.06 per cent of the issued capital.

Woo previously acquired 3.938 million shares from August 31 to September 20 at an average of HK$30.72 each, and 8.7 million shares from March 23 to July 5 at an average of HK$25.84 each. Overall, he has acquired 12.87 million shares worth HK$353.5 million since March at an average of HK$27.47 each. The stock closed at HK$34.80 on Friday.

There was heavy buying in banking stocks this month, with chairman David Li Kwok-po picking up 316,000 shares of Bank of East Asia from October 9 to 17 at an average of HK$28.96 each. Those trades lifted his purchases since August to 1.6 million shares worth HK$45.8 million.

Another was chairman David Wong Shou-yeh, of Dah Sing Financial Holdings, who bought 68,000 Dah Sing shares from October 16 to 17 at an average of HK$29.04 each. The trades increased his holdings to 120.566 million shares, or 40.66 per cent of the bank.

The trades were made after the stock rebounded by 31 per cent from HK$22.20 in June.

Investors should note that the stock has risen by an average of nearly 8 per cent six months after the chairman bought shares based on 167 purchases since 1995. The stock recorded a price gain six months after the deals on 61 per cent of the purchases. The stock closed at HK$28.90 on Friday.

Chief executive Tung Ching-sai has been bullish on glass manufacturer Xinyi Glass in the past month, with one million shares purchased from September 26 to October 5, and a further 300,000 shares on October 17 at HK$3.52 to HK$4.22 each or an average of HK$3.80 each. The trades increased his holdings to 347.469 million shares or 9.2 per cent. Tung previously acquired nearly eight million shares from May 7 to 16 at an average of HK$4.61 each.

The recent purchases bode well for shareholders, since the stock has risen by an average of 57 per cent six months after Tung bought shares based on 151 acquisitions since 2005. The stock recorded a price gain six months after those deals on 59 per cent of the purchases.

Aside from Tung, two high-level executives have bought shares in Xinyi Glass this year, with chairman Lee Yin-yee and vice-chairman Tung Ching-bor picking up 9.4 million shares and one million shares, respectively, from May to June at an average of HK$4.45 each.

The stock closed at HK$4.53 on Friday.

Chairman and chief executive Wu Zheyan recorded the first corporate shareholder trade in household products manufacturer Merry Garden since the stock was listed in July, with 8.3 million shares bought on October 15 at HK$1.20 each. The trade increased his holdings to 459.021 million shares or 45.9 per cent. The stock closed at HK$1.16 on Friday.

Robert Halili is managing director of Asia Insider