A total of 14 companies listed on the main bourse and the over-the-counter market announced last week that they would repurchase their shares after the local stock market dropped for six consecutive sessions, according to data compiled by the Taiwan Stock Exchange (TWSE).
It is estimated that the companies, which include Ta Chong Bank Ltd (大眾銀行) and Alpha Networks Inc (明泰科技), will spend up to NT$2.4 billion (US$83.6 million) to buy back their shares on the open market in a bid to increase earnings per share for shareholders, which in turn would help support their share prices.
With investors struggling with local corporate earnings and global macroeconomic headwinds, the TAIEX fell 3.71 last week from the previous week, closing at 7,134.06 on Friday, its lowest level since July 30, when it hit 7,158.88, TWSE data showed.
While the stock exchange regulator has called on listed companies to repurchase their shares to support the market, Credit Suisse said the intensity of the buyback was rather poor and the effect would be limited.
Credit Suisse strategist Jeremy Chen (陳建名) said the fact that 14 companies had announced their buyback schemes was a slight improvement on the four last month, but the number was still below the monthly average of 16.7 in the first nine months of this year and 33.5 last year.
Moreover, of the more than 150 companies that have announced their buyback schemes this year, most of them are small-capitalization firms, except Acer Inc (宏碁), Chen said.
“Large companies’ reluctance to engage in shares buybacks this year either indicates that they think their stocks are not ‘cheap’ enough, or they intend to preserve their cash for the uncertain times ahead,” Chen wrote in a note on Thursday.
He said this would not help to restore market sentiment, as daily turnover on the local market has shrunk to NT$64.2 billion this month from NT$65.9 billion last month.