Buyback consideration by primary-listed SGX stocks tops S$1.19b in 2021, a 3-year high

IN 2021, 85 primary-listed Singapore stocks bought back shares with consideration totalling S$1.19 billion, reaching a 3-year high, the Singapore Exchange (SGX) said in a market update on Tuesday (Jan 4).

For comparison, 100 primary listings bought back S$1.04 billion in shares in 2020, while close to 80 primary listings bought back S$590 million in shares in 2019.

The last peak on this front was in 2018, when S$1.53 billion in shares were bought back.

On a closer look at the tally, SGX said there was a notch-up in buybacks towards the end of 2021, with 36 of these companies conducting share buybacks in December alone, with a total consideration amounting to S$216.4 million.

The company making the most buybacks in the month was CapitaLand Investment, which repurchased 33.6 million units at an average price of S$3.35 per unit.

November saw a similar pace, with 33 primary-listed companies buying back shares with S$274.8 million in total consideration.

The S$1.19 billion in buyback consideration for the whole of 2021 represented 0.2 per cent of the total market value of all primary-listed stocks on the SGX as at the end of the year.

For some perspective, the total market capitalisation of primary-listed stocks in Singapore stood at S$650.6 billion, which is close to 3 quarters the total market capitalisation for all SGX-listed stocks - S$896.9 billion.

Leading the tally in buyback consideration were Straits Times Index (STI) constituents OCBC, CapitaLand Investment, Wilmar International, United Overseas Bank (UOB) and SGX.

Of note, OCBC alone bought back 34.3 million shares with a total consideration of S$406.1 million. The average price paid per share was S$11.83. Its shares were trading down 1.2 per cent or S$0.14 at S$11.56 as at 1.43 pm on Wednesday.

CapitaLand Investment bought back 62 million units with a total consideration of S$208.2 million. The average price paid per unit was S$3.36. The counter was trading up 0.6 per cent or S$0.02 at S$3.68 as at 1.44 pm on Wednesday.

Wilmar, UOB and SGX bought back shares with a total consideration of S$130.9 million, S$129.5 million and S$36.3 million respectively.

In 2020, STI stocks also led the tally, but DBS had topped the list then.

The top 20 primary-listed stocks that filed the highest buyback considerations in 2021 made up 96 per cent of the entire S$1.19 billion consideration, up from 94 per cent in 2020, SGX added.

Meanwhile, it pointed out that secondary-listed stocks Jardine Matheson and Hongkong Land had also conducted buybacks. These programmes target to return up to US$500 million to Jardine Matheson shareholders by the end of June this year and US$500 million to Hongkong Land shareholders by Dec 31.

Hongkong Land was the strongest-performing STI constituent since Sep 6 - the day it announced its share buyback - with a 24.3 per cent price gain by end-2021, while Jardine Matheson was among the top 5 performing STI constituents since its first buyback announcement on Sep 30.

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.

In its report, SGX noted that the motivations for share buybacks may include employee compensation plans, such as share option schemes or employee share purchase plans, or long-term capital management.

Buybacks have also been observed to broadly pick up amid market declines that are driven by international macroeconomic developments, it added.

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