Share buybacks jump 75% to $1.03 billion in 2020: SGX

The Singapore Exchange Centre in Shenton Way.
The Singapore Exchange Centre in Shenton Way.PHOTO: ST FILE

SINGAPORE (THE BUSINESS TIMES) - Total share buyback transactions for 2020 amounted to $1.03 billion with 100 primary-listed stocks conducting buybacks, said the Singapore Exchange (SGX) in a market update.

While the number of companies conducting buybacks was up 20 per cent, the full year's consideration represents a 75 per cent increase from $590 million in 2019.

Motivations for share buybacks can include employee compensation plans - such as share option schemes or employee share purchase plans - or long-term capital management, noted SGX in its report on Thursday (Jan 7). Buybacks can also pick up amid market declines that are driven by broader moves on international macroeconomic developments, it added.

The 2020 buyback consideration was led by Straits Times Index (STI) stocks DBS, Wilmar International, OCBC, Yangzijiang Shipbuilding and Singapore Technologies Engineering. This was largely similar to 2019, with Wilmar being the sole exception that replaced Keppel Reit among the top five list for 2020.

Notably, Wilmar bought back some 11.3 million of its shares for $48.1 million between Dec 1 and Dec 29 last year, at an average price of $4.27 per share. This brought the total number of shares that Wilmar bought back on the current mandate during the 2020 calendar year to 44.7 million shares, representing 0.7 per cent of its issued shares.

Prior to this, Wilmar had not bought back shares since Aug 12, 2016. SGX also highlighted a current valuation gap between Wilmar and its Shenzhen-listed subsidiary Yihai Kerry Arawana (YKA), which has a price-to-earnings (P/E) ratio of 115 times compared to Wilmar's P/E ratio of 17 times.

Together, the 20 stocks that filed the highest buyback considerations throughout 2020 accounted for 94 per cent of the entire sum of $1.03 billion.

Total share buyback consideration for December 2020 totalled $114.4 million, down from $174.2 million compared to November 2020, but up from the $70.1 million reported for December 2019.

The STI gained 1.3 per cent in December 2020, taking the decline in the benchmark index's total return to 8.1 per cent for 2020, compared to a 9.4 per cent gain in 2019.

Share buyback transactions involve share issuers repurchasing some of their outstanding shares from shareholders through the open market. Once the shares are bought back, they can be converted into treasury shares, which means they are no longer categorised as shares outstanding.