In January Stock Market Crash, 37 Corporations Bought Back Their Own Shares... A Bottom Signal

[Asia Economy Reporters Seon-ae Lee and Myunghwan Lee] As the domestic stock market experiences a sharp decline and repeated sideways movement, creating a "rapid drop and slow market" scenario, share buybacks have become actively conducted. Listed companies are collectively pulling out the share buyback card to add upward momentum to their stock prices.

According to the Korea Exchange on the 4th, 37 listed companies (40 stocks) repurchased their own shares in January. By market segment, 27 stocks were listed on KOSPI and 13 on KOSDAQ. Among them, 14 major stocks belong to KOSPI200 and KOSDAQ150 indices.

Hyundai Motor Company recorded the largest scale with a share buyback amount of 98.5 billion KRW. Including the buyback amounts of three preferred Hyundai Motor stocks, the total reaches 113.1 billion KRW. Following that, Celltrion and Celltrion Healthcare repurchased shares worth 50.5 billion KRW and 23.6 billion KRW, respectively. Meritz Financial Group executed share buybacks totaling 78.9 billion KRW, including ▲Meritz Securities (41.1 billion KRW), ▲Meritz Fire & Marine Insurance (27.4 billion KRW), and ▲Meritz Financial Group (10.4 billion KRW). Other major companies continuing share buybacks include ▲Hanssem (9.5 billion KRW), ▲SFA (9.4 billion KRW), ▲Poongsan (7.8 billion KRW), and ▲Chong Kun Dang (2.4 billion KRW).

The total buyback amount for the 40 stocks reached 330 billion KRW. Although share buybacks increased in October, November, and December last year, comparing the average monthly buyback amount excluding these three months with January's net buyback amount shows it has doubled.

According to a survey by CEO Score on the top 500 listed companies in Korea, the annual scale of share repurchases increased from 3.6664 trillion KRW in 2019 to 4.7699 trillion KRW in 2020 but fell to 3.3431 trillion KRW last year. The increase in 2020 was attributed to companies repurchasing shares to support stock prices amid the COVID-19 impact, but the amount decreased in 2021 as stock prices recovered.

Many companies still have remaining share buyback quotas for this year. As of the 27th of last month, a total of 24 stocks had remaining buyback balances. Hyundai Motor showed a 84.9% buyback progress rate, leaving 322,700 shares remaining for repurchase. Celltrion and Celltrion Healthcare plan to repurchase 166,500 shares and 191,100 shares, respectively. Others planning buybacks include ▲Inseon ENT (525,000 shares), ▲Poongsan (428,400 shares), and ▲Hanssem (25,900 shares).

Many companies have also announced new share buyback plans. According to the Financial Supervisory Service's electronic disclosure system, 29 companies disclosed share buyback plans last month. This is more than double the 12 companies that disclosed buybacks during the same period last year. The total announced buyback amount by these 29 companies was 447 billion KRW. Celltrion and Celltrion Healthcare announced buybacks worth 100 billion KRW and 50 billion KRW, respectively, while Mirae Asset Securities and Kiwoom Securities disclosed buybacks of 83.6 billion KRW and 44 billion KRW, respectively.

Senior Research Fellow Hwang Se-woon of the Korea Capital Market Institute stated, "When companies repurchase their shares, the circulating supply decreases, which can improve supply and demand in the short term," but emphasized, "However, since these shares can be released back into the market at any time, they should be canceled (retired) rather than held or disposed of."

In January, two companies, Deoksan Hi-Metal (26.9 billion KRW) and Inhwa Precision (2 billion KRW), disposed of their treasury shares. The scale of share disposals increased by 232.2% (3.1536 trillion KRW) over two years, from 1.3581 trillion KRW in 2019 to 4.0786 trillion KRW in 2020 and 4.5118 trillion KRW last year. However, disposals for the purpose of share cancellation also nearly tripled over two years, from 846 billion KRW in 2019 to 1.0641 trillion KRW in 2020 and 2.3517 trillion KRW last year.

This year, Mirae Asset Securities announced a plan to cancel treasury shares worth 200 billion KRW, and POSCO also set a plan to cancel some shares within the year.

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