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the scale of repurchases in the hong kong stock market has increased significantly this year. the total repurchase amount from the beginning of the year to date has exceeded hk$180 billion, while the total repurchase amount for the whole of last year was more than hk$120 billion.

securities times reporters found that behind the record-breaking repurchase scale of hong kong stocks, leading internet companies whose main business is in the mainland took up the "banner" of repurchase. at the same time, leading foreign-funded international companies and leading hong kong local companies also vigorously carried out repurchases.

an expert said in an interview with a securities times reporter that the repurchase demonstrates the confidence of the relevant hong kong-listed companies in their intrinsic value, has a positive impact on the overall hong kong stock market, and is conducive to enhancing investor confidence.

the scale of hong kong stock repurchases this year has far exceeded that of last year

the scale of repurchases in the hong kong stock market has increased significantly this year. according to ifind data from 10jq, if calculated based on the repurchase date, the total repurchase amount in the hong kong stock market from the beginning of the year to date has exceeded hk$180 billion, far exceeding the total repurchase amount in the hong kong stock market last year (last year's total was more than hk$120 billion).

this trend and phenomenon was also confirmed by the data recently released by hang seng index company. according to the blog released by hang seng index company on august 20, from the beginning of the year to august 16, 2024, the amount of hong kong stock repurchases exceeded last year's total by 29.8%, setting a historical high of hk$164.8 billion.

the increase in hong kong-listed companies' repurchases is not only reflected in the repurchase amount, but also in the number of repurchases. according to ifind data, if calculated by repurchase date, the number of hong kong-listed companies that have repurchased since the beginning of this year has exceeded 220, which also exceeds the total number of listed companies that repurchased in the hong kong stock market last year. data shows that under the same statistical caliber, the number of hong kong-listed companies that repurchased last year was around 200.

in terms of stages, the scale of hong kong stock repurchases has generally remained at a high level in recent months. ifind data shows that the total repurchase amount in june this year reached hk$38.1 billion, the highest in the year. it declined in july and august, but still exceeded the average monthly repurchase scale in the first half of the year.

repurchase entities are diverse and many companies are stepping up repurchase efforts

the reporter found that the repurchases in the hong kong stock market have some other characteristics since the beginning of this year.

from a structural perspective, among the companies with the largest repurchase scale this year, leading internet companies with main business in the mainland have taken up the "banner" of repurchase with their stable operation and strong financial strength, becoming the main force of repurchase in the hong kong stock market this year. at the same time, leading foreign-funded international companies and leading hong kong listed companies are also not far behind, and have vigorously carried out repurchases.

for example, among the companies whose repurchase amount exceeded hk$10 billion this year, tencent holdings' repurchase amount exceeded hk$70 billion, and hsbc holdings, meituan, and aia's repurchase amount exceeded hk$20 billion this year. dongyue group, xiaomi group, kuaishou, hang seng bank, swire pacific, cheung kong group, wuxi biologics, yum china and other companies' repurchase amount exceeded hk$1 billion this year.

with the end of the sensitive period of performance disclosure, some leading hong kong stock companies have recently resumed share buybacks. for example, tencent holdings resumed a new round of share buybacks on august 16 after suspending its share buybacks for a month, and meituan also resumed share buybacks on september 2 after suspending its share buybacks for about a month. in addition, data also shows that in recent months, many companies in the hong kong stock market have been repurchasing shares more continuously, such as kuaishou and swire pacific, which have continued to repurchase shares in recent months.

compared with last year, the repurchase amount of companies newly joining the repurchase this year has increased significantly. according to statistics from the hang seng index company not long ago, from the beginning of the year to august 16, 76 listed companies were new companies joining the repurchase this year, with a repurchase amount of hk$33.6 billion, accounting for 20.4% of the total repurchase amount from the beginning of the year to date (the repurchase amount of companies newly joining the repurchase in 2023 accounted for 7% of the total). for example, meituan did not repurchase shares last year, but joined the share repurchase camp this year, and the scale of repurchase quickly ranked among the top hong kong-listed companies this year.

many companies have significantly increased their repurchase efforts. for example, xiaomi group's repurchase amount last year was about hk$1.5 billion, and this year, xiaomi group's repurchase amount has exceeded hk$3 billion; cspc pharmaceutical group's repurchase amount last year was just over hk$200 million, and this year, cspc pharmaceutical group's repurchase amount has exceeded hk$800 million.

experts: buybacks are beneficial to boosting investor confidence and have a positive impact

as for the reasons for the active share buybacks in the hong kong stock market this year, there is a market view that the overall valuation of the hong kong stock market has been low in recent years, and the share prices of related companies have been under pressure and have been low in valuation, which has increased the motivation of companies to repurchase their own shares in order to support share prices through share buybacks.

as for the reasons for the sharp increase in the scale of repurchases in the hong kong stock market this year, zhang zhiwei, president and chief economist of baoyin investment, believes that there are several reasons in an interview with a securities times reporter.

on the one hand, zhang zhiwei believes that the market value of relevant hong kong-listed companies is relatively cheap, and they have fallen a lot before. from the company's perspective, the repurchase demonstrates the confidence of the relevant companies in their intrinsic value. he pointed out that in other countries' markets, such as the us stock market, the repurchase is relatively strong, which also helps to boost stock prices.

on the other hand, zhang zhiwei believes that some hong kong-listed companies have performed well in terms of operating income, profit and other data, but this is not fully reflected at the stock price level. this may be due to some external factors, resulting in a decline in the correlation between the company's stock price and actual operations, which has also become a reason for the company's repurchase.

zeng hengwei, a wealth manager at paipai.com, also believes in an interview with reporters that the frequent repurchases by hong kong-listed companies, which are larger than last year, have multiple reasons behind this phenomenon. first, from the perspective of company fundamentals and confidence, repurchases are usually seen as a signal that the company's management is confident in its future profitability. when the market is sluggish, companies choose to repurchase shares, which often means that they believe that the stock is undervalued and hope to stabilize and increase the stock price through this move. for example, the repurchase behavior of leading companies such as tencent holdings and anta international not only demonstrates confidence in their own stock prices, but also sends positive signals to the market.

secondly, changes in the market environment have also promoted the increase in buyback activities. as the global economy gradually recovers and the market environment becomes more friendly, companies are more inclined to enhance shareholder returns through buybacks. as one of the international financial centers, the increase in hong kong's stock market buyback activities also reflects the recovery of market confidence.

furthermore, changes in policies and rules are also an important factor driving the increase in repurchase activities. the newly revised share repurchase rules of the hong kong stock exchange allow listed companies to hold repurchased shares in treasury form and retain their listing status. this change has increased the flexibility of listed companies to repurchase shares and reduced operating costs, thereby promoting the increase in repurchase activities. after the new treasury stock rules come into effect, listed companies are no longer required to cancel repurchased shares, which provides them with more capital management tools and helps to improve their market competitiveness.

in addition, capital market liquidity and interest rate environment also have an impact on repurchase activities. the current low interest rate environment has reduced corporate financing costs, and repurchase has become a cost-effective capital allocation strategy. the liquidity of the hong kong stock market is also relatively good, providing a good soil for repurchase activities.

feng xiang, investment director of tongwei investment, said in an interview that the hong kong stock market has always been more international and has been greatly affected by global capital flows. since the fed entered the interest rate hike cycle, hong kong stocks have had major liquidity problems, leading to general undervaluation. the market predicts that the fed will enter a rate cut cycle this month, and improved liquidity will lead to a rebound in valuations; at this time, listed companies choosing to repurchase will help improve the company's shareholder return level and stabilize stock prices, which is good for the stable development of the market.

feng xiang believes that under the new treasury stock mechanism, the repurchased shares of hong kong-listed companies can no longer be cancelled compulsorily. the removal of the provisions on the cancellation of repurchased shares will help issuers manage their capital structure more flexibly and help hong kong align with international market practices. although there may be increased regulatory risks in terms of market manipulation and insider trading, these risks can be reduced as long as there is an appropriate framework to regulate the resale of treasury shares. in addition to improving shareholder returns, hong kong-listed companies can use treasury shares for employee equity incentives, or resell treasury shares in batches or as payment for asset acquisitions to achieve flexible financing, which will help to enhance the enthusiasm and flexibility of hong kong-listed companies in share repurchases, and is expected to further improve the overall shareholder returns of hong kong stocks.

as for the impact of buybacks on the future market, zhang zhiwei believes that buybacks have a positive impact on the hong kong stock market as a whole, which is conducive to boosting investor confidence and is helpful in all aspects. he believes that the expectation of a us interest rate cut is actually more favorable to hong kong stocks from the perspective of the international environment.

zeng hengwei believes that the active repurchase of hong kong stocks will have a positive impact on the future trend of the hong kong stock market. it is expected to boost stock prices, enhance market confidence and improve market structure in the short term. however, investors also need to pay attention to potential risk factors, such as market sentiment fluctuations and changes in the global economic situation, so as to maintain a cautious attitude and formulate reasonable investment strategies.

feng xiang believes that hong kong stocks have gradually begun to show signs of recovery before the second quarter of this year, and the share prices of most repurchased stocks such as tencent and xiaomi have been rising steadily this year. under the premise that the valuation of hong kong stocks is attractive and the liquidity is good, investors with conditions can appropriately allocate some valuable and growing targets in hong kong stocks.