LAST week's sale by CITIC Hong Kong of 60.1 million shares of Hongkong Telecom for about $950 million - not long after Cheung Kong (Holdings) sold 37.8m shares of Hutchison for $1.5 billion - is the latest example of local investors selling holdings in companies here. The trend has gained momentum over the past two months, not only as evidenced from selling by corporates such as CITIC and Cheung Kong, but from selling among corporate directors of Hang Seng Index (HSI) constituents, a slowdown in company buyback activity, and domestic redemptions of Hong Kong equity funds. During May, dealing by directors of HSI constituent companies reached its highest net sell level since September, with directors selling $167 million worth of stock while acquisitions were $73.5 million. Directors sold more shares than they bought in April, with disposals outpacing acquisitions by $15 million. Of the 16 HSI constituents that saw director dealing in May, 13 experienced selling, while seven saw buying at prevailing market prices. Directors at Hang Lung Development bought $30 million, Hong Kong and China Gas directors bought $21 million, and Great Eagle saw directors buy $1.4m. Company buyback activity has tapered off in terms of the number of companies buying back their shares and the total value of funds committed for share repurchases. Since reaching an all-time high of $531 million in January, the value of company buybacks dwindled to $50 million in May, after rising to $105 million in April. However, while volumes have declined, the number of buyback transactions per month since February has remained fairly high by historical standards, ranging from 139 to 180. This shows that smaller companies are making the bulk of share buybacks. This is a marked change from buyback activity in January, which saw HSI constituents such as Hutchison, CITIC, and Swire, acquire substantial amounts of shares. The territory's unit trust investors have also been reducing their exposure to Hong Kong equities, as redemptions of Hong Kong equity funds outpaced sales for the three months from February through April. According to the Hong Kong Investment Funds Association (HKIFA), which monitors fund activity in the territory, Hong Kong equity funds reported US$22 million worth of redemptions in March, the most redemptions since May last year. While the level of redemptions has increased over the past several months, redemptions have been outpacing sales for the past year, with Hong Kong equity funds experiencing net redemptions in 10 of the past 12 months.