[ET Net News Agency, 8 June 2018] HSBC Global Research said peak-level share buyback
activity could be an effective signal and reliable leading indicator of market valuation
trough and potential upside.
The research house said buybacks indicate that company owners take a comparatively
positive view on the "undervalued" industries in which they operate and suggest that
management teams feel they have better insight than other investors into their companies'
fair value and growth potential.
By 31 May 2018, 189 (9%) of Hong Kong-listed companies, have conducted 3,262 share
buybacks since 2017, with a total value of over HK$42bn. The surge in buyback activity
(2,545 in the past 12 months versus the 10-year average of 597 share buybacks per annum)
is highly concentrated in large-cap stocks and the property, consumer discretionary and IT
sectors.
HSBC highlighted nine stocks that may have more free cash flow available for shareholder
remuneration and a higher chance of more buybacks. These stocks are CK Asset Holdings
(01113), The Link REIT (00823), Swire Pacific (00019), Red Star Macalline Group (01528),
ASM Pacific Technology (00522), Lee & Man Paper Manufacturing (02314), Luye Pharma Group
(02186), Sino Land Company (00083) and Xinyi Glass Holdings (00868). (KL)