A recent news report has captured market attention, revealing that for the first time, the amount of stock buybacks in the Chinese stock market has surpassed the scale of equity financing. As of October 20th, the buyback amount in the A-share market has reached 148.2 billion yuan, while the Hong Kong stock market has seen buybacks amounting to 202.1 billion yuan, with both figures setting historical highs and totaling 350.
3 billion yuan. Concurrently, the scale of equity financing in the A-share market stands at 236.4 billion yuan, and in the Hong Kong stock market, it is 112.8 billion yuan, combining for a total of 349.2 billion yuan. Therefore, the total buyback amount of 350.3 billion yuan has exceeded the equity financing scale of 349.2 billion yuan. Generally, during market downturns, listed companies may view stock buybacks as a more effective capital operation method to enhance earnings per share and price-to-earnings ratios, thereby driving stock prices higher, compared to direct financing.
Additionally, buybacks are seen as a positive signal that can boost market sentiment and investor confidence. In the Hong Kong stock market, Tencent Holdings (00700.HK), HSBC Holdings (00005.HK), Meituan-W (03690.HK), AIA Group (01299.HK), and Kuaishou-W (01024.HK) have conducted buybacks amounting to 90.558 billion Hong Kong dollars, 36.483 billion Hong Kong dollars, 27.757 billion Hong Kong dollars, 4.
109 billion Hong Kong dollars, and 4.110 billion Hong Kong dollars, respectively. It is noteworthy that Tencent’s buyback amount for the year has accounted for 40% of the total market amount, indicating a significant proportion in the Hong Kong stock market. Why is Tencent aggressively buying back its own shares? The company is optimistic about its future development: Tencent continues to buy back shares to express confidence in its own value.
This reflects Tencent’s confidence in its business and its insight into future market trends. To alleviate the selling pressure on stock prices caused by major shareholders’ reduction: The market generally believes that Tencent’s buybacks are aimed at reducing the selling pressure on stock prices due to major shareholders’ reductions, and that the cancellation of repurchased shares is beneficial for reducing share capital and increasing shareholder returns.
Generally, listed companies use cash on hand to repurchase shares, and these repurchased shares can be canceled. The effect of share cancellation is to increase the growth rate of earnings per share, boost market confidence, and increase shareholder returns.
