South Korea’s publicly traded companies excluding Samsung Electronics Co. were found to have cut back on their share buyback plans amid the country’s extended stock market rally.
According to Korea Exchange on Monday, the number of companies that decided to buy back their shares this year was 72, down 22 companies, or 23.4 percent, against the year-ago period.
The payout inched up to 8.25 trillion won ($7.58 billion) this year from last year’s 8.13 trillion won but mostly on the back of Samsung Electronics’ aggressive buyback plan. The world’s top chipmaker, under a four-stage share buyback program this year, has repurchased 7.5 trillion won of its stocks to share its massive profits with shareholders.
When excluding Samsung Electronics’ repurchases, the total share buyback volume of the country’s listed companies this year has narrowed to 700 billion won from last year’s 2.6 trillion won.
The reduced share buybacks are largely attributed to the year-long run in the country’s stock market, according to market analysts. Companies generally buy back their own stocks in a bearish market to boost their stock prices and lift shareholder value. But many firms seem to have found this unnecessary this year given the fact that the country’s main Kospi and secondary Kosdaq markets enjoyed an unprecedented rally.
Data also showed that the shareholder return of the 72 companies that performed a buyback fell short of the average market return. Share prices of 54 Kospi-listed companies were up an average 3.4 percent during the share repurchasing period, underperforming the 5.4 percent rise in the broader Kospi index. The average return of 51 Kosdaq-listed companies also stopped short of 2 percent compared to the 8.3 percent average growth of the Kosdaq.
By Yoo Joon-ho and Kim Hyo-jin
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