Share buybacks soared to 55-month high in March

The total consideration for the quarter nearly reached the full $544m figure in 2019.

The total share buyback consideration surged to $448m in March, according to market updates from the Singapore Exchange (SGX). This represented a 55 month high since the $544m figure recorded in August 2015.

This has brought the total consideration of share buybacks for SGX primary-listed stocks to $546m in the first quarter of the year, close to the $590m in consideration for the entire calendar year of 2019.

A total of 53 primary-listed stocks conducted buybacks in Singapore in the first three weeks of March, compared to 16 stocks in January and 17 stocks in February. DBS Group took up most of the buyback consideration at $368.02m, followed by OCBC and UOB with $19.23m and $16.23m, respectively.

Motivations for share buybacks can include employee compensation plans or long term capital management, the report noted.

Buybacks were noted to pick up as markets declined due to broader moves on international macroeconomic developments, This was observed in August and September 2015, when the STI declined 13% for two months and buybacks surged to close to $1b.

As of 20 March close, the Straits Times Index (STI) crashed 20% to 2,410.74. The STI 30 day volatility also climbed to 35.2%, the highest since June 2009, bringing the STI’s price decline to 25.2% for YTD 2020, in-line with the 28.3% average decline for major ASEAN indices.

Across ASEAN stock markets, the most defensive sectors have been the utilities and healthcare sectors, whilst the technology and energy sectors have been the worst hit by the sharp increase in global volatility.

Regional large-cap stocks were also the most affected, with the top two quartiles of ASEAN stocks by market value generating a median decline of 26% and 21% respectively, whilst the lowermost 50% generated a median decline of 18%.