Securities Industry Share Buyback Relay

Mirae Asset and Others Strengthen 'Shareholder Return Policy' in Response to Record-Breaking Performance

[Asia Economy Reporter Park Jihwan] The securities industry is actively engaging in share buybacks to enhance shareholder value. Despite the impact of COVID-19 last year, the industry posted record-breaking earnings and is now pursuing shareholder return policies that match these results.

According to the Financial Supervisory Service on the 26th, securities firms that have disclosed share buybacks this year include KTB Investment & Securities, Meritz Securities, Shin Young Securities, and Mirae Asset Securities. KTB Investment & Securities announced a decision to acquire 1,804,005 shares of treasury stock yesterday. They will acquire treasury shares worth 18 billion KRW through over-the-counter direct purchases by February 9. Meritz Securities also announced a plan on the 18th to buy back treasury shares worth 100 billion KRW. NH Investment & Securities and Samsung Securities have signed trust contracts for treasury stock acquisition and will proceed with share buybacks until March next year. The company stated, "All shares acquired through this trust contract will be canceled after acquisition." Shin Young Securities completed the acquisition of 50,000 preferred treasury shares from the 3rd of last month to the 11th of this month.

The most aggressive in shareholder return policies through share buybacks in the securities industry is Mirae Asset Securities. Mirae Asset Securities decided to purchase 10.5 million common treasury shares worth 100 billion KRW in January, followed by a decision in February to cancel 10 million treasury shares worth 82.3 billion KRW. Last year, they acquired 50 million treasury shares in four rounds and canceled about 13 million treasury shares worth 68.1 billion KRW.

The recent wave of share buybacks in the securities industry is interpreted as a shareholder return measure in response to the record-high performance driven by last year's stock market boom and the so-called ‘Donghak Ant Movement,’ a surge in stock investments by individual investors. Last year, 57 domestic securities firms posted a net profit of 5.9148 trillion KRW, an increase of 1.0203 trillion KRW (20.8%) compared to the previous year.

Typically, share buybacks reduce the number of shares circulating in the market, positively impacting stock prices. Additionally, canceling treasury shares decreases the number of issued shares, increasing the value per share and thereby enhancing shareholder profits. Over the past three years, Mirae Asset Securities is the only firm in the industry that has conducted treasury share cancellations. Kang Sohyun, a research fellow at the Korea Capital Market Institute, said, "If acquired treasury shares are not permanently canceled to reduce the number of issued shares, there is a possibility they may be disposed of again in the future," adding, "Continuous attention and caution from investors are necessary."

This content was produced with the assistance of AI translation services.