HSBC repurchases boost buyback value on Hong Kong exchange

PUBLISHED : Sunday, 06 August, 2017, 4:30pm
UPDATED : Sunday, 06 August, 2017, 10:01pm

The insider activity fell for the second straight week based on filings on the Hong Kong stock exchange from July 31 to August 4, with 15 companies that recorded 75 purchases worth HK$74 million versus three firms with 19 disposals worth HK$6 million.

The figures were down from the previous week’s 23 companies, 158 purchases and HK$119 million on the buying side and 8 firms, 45 disposals and HK$55 million on the selling side.

Meanwhile, the buyback activity fell for the fourth straight week with seven companies that posted 36 repurchases worth HK$379 million based on filings from July 28 to August 3. The number of firms and trades were down from the previous 5-days’ totals of 14 companies and 46 repurchases.

The value, however, was nearly triple the previous 5-days’ turnover of HK$133 million. The huge buyback value was due to repurchases by blue chip HSBC Holdings last week worth HK$319 million.

Despite the slowdown in director and buyback activity, there were several significant filings last week with buybacks in HSBC Holdings and rare insider buys in Carrianna Group Holdings, Vestate Group Holdings and developer Central China Real Estate Limited.

Blue chip global banking giant HSBC Holdings bought back 4.04 million shares (via the London Stock Exchange) from August 1 to 2 at an average of HK$79.02 each. The group previously acquired 122.6 million shares from February 22 to April 12 at HK$62.26 to HK$65.81 each or an average of HK$63.33 each. Prior to the buybacks this year, the company acquired 325.27 million shares from August to December 2016 at HK$52.92 to HK$66.50 each or an average of HK$59.63 each. The stock closed at HK$78.50 on Friday.

Significant points:

  • HSBC has embarked on another buyback programme with plans to repurchase US$2 billion (HK$15.6 billion) worth of shares up until the end of 2017
  • The recent buybacks were made after the stock rose by as much as 27 per cent from its acquisition prices from February to April this year
  • The stock appreciated during HSBC’s two previous buyback sprees. The counter rose from HK$62.26 to HK$65.81 from February to April this year and HK$52.92 to HK$66.50 from August to December 2016
  • HSBC will likely buy back daily from August to December this year. Based on its last buyback spree, the group bought shares on every day from February 22 to April 12 with the buybacks accounting for 16 per cent of the stock’s trading volume
  • The repurchases since August 2016 are the group’s first buybacks based on filings on the exchange since 1992

Founder and non-executive director Ma Kai Cheung and chairman Ma Kai Yum acquired shares of hotel, restaurant and food businesses operator and property investor Carrianna Group with a combined 6.5 million shares purchased from July 25 to August 2 at an average of HK$0.90 each.

Ma Kai Cheung purchased 4.0 million shares on July 26 at HK$0.90 each, which increased his stake to 520.709 million shares or 41.51 per cent of the issued capital. He previously acquired 10.65 million shares from December 2013 to August 2015 at HK$1.55 to HK$0.69 each or an average of HK$1.33 each.

Ma Kai Yum, on the other hand, purchased 2.5 million shares from July 25 to August 2 at an average of HK$0.90 each. The trades increased his holdings to 169.875 million shares or 13.54 per cent of the issued capital. He previously acquired 2.5 million shares from July to August 2016 at an average of HK$0.74 each. Prior to his purchases since July 2016, the chairman acquired 1.3 million shares from July to September 2015 at HK$0.68 to HK$0.82 each or an average of HK$0.745 each and 6.14 million shares from November 2014 to February 2015 at HK$1.08 to HK$0.88 each or an average of HK$0.984 each. Prior to his trades since 2014, the chairman acquired 560,000 shares in October 2008 at an average of HK$0.33 each and 300,000 shares in May 2007 at HK$2.15 each. The counter closed at HK$0.94 on Friday.

Significant points:

  • Two high level executives recorded rare buys after the stock rose by 15 per cent from HK$0.78 in May
  • Founder Ma Kai Cheung recorded his first on-market trade since August 2015
  • Chairman Ma Kai Yum recorded his first on-market trades since August 2016
  • The purchases by these two directors accounted for 19 per cent of the stock’s trading volume

Chairman Zhu Xiaojun recorded his first on-market trade in footwear manufacturer and distributor Vestate Group since he joined the group in February 2016 with 8.4 million shares purchased on July 27 at HK$1.22 each. The trade increased his holdings to 489.137 million shares or 68.3 per cent of the issued capital. The stock closed at HK$1.26 on Friday.

Significant points:

  • Chairman Zhu Xiaojun recorded his first on-market trade since he joined the group in February 2016
  • The purchase was made on the back of the 41 per cent decline in the share price since August 2016 from HK$2.05. Despite the fall in the share price, the counter is still up since 2013 from HK$0.31.
  • The chairman’s purchase was surprising as the group announced in July a year-end loss of HK$210.196 million which was more than the loss of HK$156.894 million in the previous year

Executive director Liu Weixing recorded his first on-market trades in mainland China property developer Central China Real Estate since his appointment in March 2017 with one million shares purchased from July 27 to 28 at an average of HK$2.40 each. The trades increased his holdings by 5 per cent to 21.000 million shares or 0.86 per cent of the issued capital. The stock closed at HK$2.57 on Friday.

Significant points:

  • Executive Director Liu Weixing recorded his first on-market trades since his appointment in March 2017
  • The purchases were made after the stock rose by as much as 38 per cent from HK$1.70 in the last week of June

Robert Halili is managing director of Asia Insider

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