They see good value and investors consider support to be positive sign
PANIC was the last thing on the minds of many company founders and directors when Singapore share prices slumped in spectacular fashion just over a week ago.
Instead, they have leapt into the fray, buying up their own stock at bargain-basement prices since the Aug 17 market nosedive - which followed weeks of volatility.
Companies have also seen a buying opportunity and are weighing in to buy back their shares on the open market.
The Straits Times Index plunged as much as 190 points on Aug 17 and many directors and companies instantly saw good value.
They were emboldened by the fact that many firms had just turned in creditable second-quarter financial results, indicating that corporate fundamentals were sound.
On average, Singapore-listed firms posted a 39 per cent rise in first-half net profits.
One buyer was one of Singapore’s richest men, Mr Zhong Sheng Jian, chief executive of China real estate developer Yanlord Land. He bought 987,000 shares on Aug 16 at an average price of $2.57 and another one million shares at $2.65 a day later.
Even though he shelled out a hefty $5.2 million over two days, these prices are a far cry from the high of $3.68 per share seen just last month.
Market watchers say insiders sometimes buy in during tough times to inspire confidence in a counter.
Mr Kevin Scully, managing director of boutique corporate finance firm NRA Capital, said: ‘Sometimes, this buying is a show of support for the company. It is a good sign because investors want to see support.’
Another bargain-hunter was luxury property developer SC Global chairman and chief executive Simon Cheong, whose wife bought 100,000 shares on Aug 17 at $4.755 apiece, well below the record $6.75 seen last month.
Other key shareholders in the market during this recent turmoil include Yellow Pages director Stanley Tan, who has just emerged from a boardroom battle. He bought 200,000 shares at $1.197 apiece on Monday, another 350,000 units at $1.196 on Tuesday and yet another 200,000 shares on Wednesday at $1.19. The counter has not closed below $1.20 since last November.
Sino-Environment’s chairman and chief executive, Mr Sun Jiangrong, also showed support for his firm, buying 900,000 shares at $2.44 on Tuesday. In April, the waste- treatment firm’s shares hit a peak of $3.78.
Company directors were also in the action. Mr Sam Goi bought 500,000 shares in Super Coffeemix Manufacturing at 75 cents each on Aug 17.
But the swift rebound in the market on Monday also allowed some directors to make a pretty penny.
A director of a Cosco Corp subsidiary, Mr Lee Fook Choy, picked up 500,000 shares at a low of $3.882 on Aug 17 - after they slumped from the $5.65 record late last month. He then sold the shares on Tuesday at $4.60, making a tidy $360,000.
For companies which have a share buyback programme, the current market weakness presents good buying opportunities.
NRA Capital’s Mr Scully added that for firms with a performance share scheme, ‘companies may buy back the shares to allocate to employees later as part of their performance bonus scheme’.
Over the last few days, many companies have been in the market. StarHub bought nearly two million shares at prices ranging from $2.78 to $2.90 since last Friday.
Also since Aug 17, United Overseas Bank has bought back 2.1 million shares at prices as low as $18.80. These have risen as high as $21.50.