Hong Kong-listed companies are taking advantage of the dip in one of the world’s worst-performing stock markets by increasing their share buyback activities. This trend is in contrast to the gains seen in other Asian markets.
According to Hang Seng Indexes Co., share repurchases are expected to reach HK$92.9 billion ($11.9 billion), which is about 3.9 times higher than the average of the past five years. Currently, about HK$73.5 billion worth of shares have already been repurchased.
This ongoing buying spree follows a similar trend from the previous year when corporate stock repurchases increased by 175% as the Hang Seng Index experienced a decline. In 2023, the benchmark has fallen by approximately 9%, making it the worst-performing major regional index worldwide.
Hang Seng Indexes Co. suggests that the high level of buyback activities may indicate that Hong Kong-listed companies believe their shares are undervalued. This could be an opportunity for investors to take note and potentially find value in the market.
This increase in share buybacks by Hong Kong-listed companies highlights their confidence in the long-term prospects of the stock market. It is worth noting that share repurchases can have various benefits for companies, such as signaling confidence in their own business and improving earnings per share.