Share buybacks up 75% to $1.03b in 2020: SGX

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

Total share buyback transactions for last year 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 yesterday.

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 Group Holdings, Wilmar International, Oversea-Chinese Banking Corporation, Yangzijiang Shipbuilding and Singapore Technologies Engineering.

This was largely similar to the year before, with Wilmar being the sole exception as it 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 29 last year, at an average price of $4.27 per share.

This took 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 August 2016.

SGX also highlighted a current valuation gap between Wilmar and its Shenzhen-listed subsidiary Yihai Kerry Arawana, which has a price-to-earnings ratio of 115 times compared with Wilmar's price-to-earnings ratio of 17 times.

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

Total share buyback consideration for December last year totalled $114.4 million, down from $174.2 million in November, but up from the $70.1 million reported for December 2019.

The STI gained 1.3 per cent last December, 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 the year before.

Share buyback transactions involve share issuers repurchasing some of their outstanding stocks 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.


A version of this article appeared in the print edition of The Straits Times on January 08, 2021, with the headline 'Share buybacks up 75% to $1.03b in 2020: SGX'. Print Edition | Subscribe