Illustrative image (Photo: VNA) Hanoi (VNS/VNA) - Following aglobal trend of share buybacks, many Vietnamese businesses are now repurchasingtheir own stocks to stabilise prices.
When companies buy their own stocks, theyreduce the total amount of shares on the market, inflating common metrics likeearnings per share, which typically boosts the stock price.
While investor confidence, reacting to aworsening economic outlook, has deteriorated, the world's largest economy hasstill recorded gains thanks to a series of rate cuts by the US Federal Reserve(Fed) and the wave of share buybacks of companies.
The Financial Times quoted data compiled byHoward Silverblatt, senior index analyst for S&P Dow Jones Indices, assaying that last year, companies in the S&P 500 spent a record US$806billion buying back shares.
“Activity this year has slowed slightly,but remains on track to be one of the most active on record,” the newspapersaid, adding that in the third quarter this year, US companies were expected tospend around $170 billion on their own stocks.
In Vietnam, more than 25 enterprises thatspent nearly 18.4 trillion VND (791 million USD) on their own stocks in thefirst nine months of this year, equivalent to 10.4 percent of their totalcharter capital.
Early this year, the constructionconglomerate Cotec Construction Joint Stock Company (CTD) spent 430 billion VNDto buy back 2.7 million shares. The value of the shares was equal to 55 percentof the firm’s charter capital.
Low-cost carrier VietJet Air (VJC),Military Bank (MBB), Tien Phong Commercial Joint-Stock Bank (TPB), VNDirectSecurities Corporation (VND) and Dien Quang JSC (DQC) have also spent hundredsof billions on their own stocks so far this year.
The amount of money firms spend on theirown shares in Q4 is expected to soar as a series of businesses have announcedbuybacks plans. For example, Vinhomes (VHM) plans to spend 5.6 trillion VND andVincom Retail will use 1.96 trillion VND.
Companies only repurchase shares when theyhave strong financial capacity. As in the case of the HVC Technology andInvestment JSC (HVH), the firm plans to spend 9.2 billion VND to buy back500,000 shares, equivalent to 2.5 percent of charter capital. Its leaders saidthe plan confirmed the firm’s financial capacity and created trust amongshareholders.
The price of HVH shares has fallen 37.5 percentfrom its peak reached in mid-August this year.
Enterprises also plan to repurchase shareswith the aim of putting them up for sale at higher prices.
Military Bank (MBB) plans to issue morethan 250 million shares this month, including both new shares and 47 milliontreasury shares the bank bought back in late February for 1.3 trillion VND (56million USD).
According to the bank, the differencebetween the buying and selling price could reach over 30 percent.
When a firm repurchases its own stocks,prices can be unpredictable, so it's difficult for the firm to know if it is aneffective investment decision.
If the stock price increases or the companyitself needs capital, those treasury shares will be offered to the public.
Last month, sugar producer Thanh Thanh Cong- Bien Hoa Joint Stock Company (SBT) transferred 61 million treasury shares toits two board members, Huynh Bich Ngooc and Dang Huynh Uc My.
The company collected 1.14 trillion VND fromthe sale, 3.6 percent higher than the amount spent to buy back 61 millionshares in April 2018.
The Asia Commercial Joint Stock Bank (ACB)last month announced a plan to sell more than 35 million treasury shares toraise capital. The selling price is expected to be 48 percent higher than theprice the bank paid for the shares./.
When companies buy their own stocks, theyreduce the total amount of shares on the market, inflating common metrics likeearnings per share, which typically boosts the stock price.
While investor confidence, reacting to aworsening economic outlook, has deteriorated, the world's largest economy hasstill recorded gains thanks to a series of rate cuts by the US Federal Reserve(Fed) and the wave of share buybacks of companies.
The Financial Times quoted data compiled byHoward Silverblatt, senior index analyst for S&P Dow Jones Indices, assaying that last year, companies in the S&P 500 spent a record US$806billion buying back shares.
“Activity this year has slowed slightly,but remains on track to be one of the most active on record,” the newspapersaid, adding that in the third quarter this year, US companies were expected tospend around $170 billion on their own stocks.
In Vietnam, more than 25 enterprises thatspent nearly 18.4 trillion VND (791 million USD) on their own stocks in thefirst nine months of this year, equivalent to 10.4 percent of their totalcharter capital.
Early this year, the constructionconglomerate Cotec Construction Joint Stock Company (CTD) spent 430 billion VNDto buy back 2.7 million shares. The value of the shares was equal to 55 percentof the firm’s charter capital.
Low-cost carrier VietJet Air (VJC),Military Bank (MBB), Tien Phong Commercial Joint-Stock Bank (TPB), VNDirectSecurities Corporation (VND) and Dien Quang JSC (DQC) have also spent hundredsof billions on their own stocks so far this year.
The amount of money firms spend on theirown shares in Q4 is expected to soar as a series of businesses have announcedbuybacks plans. For example, Vinhomes (VHM) plans to spend 5.6 trillion VND andVincom Retail will use 1.96 trillion VND.
Companies only repurchase shares when theyhave strong financial capacity. As in the case of the HVC Technology andInvestment JSC (HVH), the firm plans to spend 9.2 billion VND to buy back500,000 shares, equivalent to 2.5 percent of charter capital. Its leaders saidthe plan confirmed the firm’s financial capacity and created trust amongshareholders.
The price of HVH shares has fallen 37.5 percentfrom its peak reached in mid-August this year.
Enterprises also plan to repurchase shareswith the aim of putting them up for sale at higher prices.
Military Bank (MBB) plans to issue morethan 250 million shares this month, including both new shares and 47 milliontreasury shares the bank bought back in late February for 1.3 trillion VND (56million USD).
According to the bank, the differencebetween the buying and selling price could reach over 30 percent.
When a firm repurchases its own stocks,prices can be unpredictable, so it's difficult for the firm to know if it is aneffective investment decision.
If the stock price increases or the companyitself needs capital, those treasury shares will be offered to the public.
Last month, sugar producer Thanh Thanh Cong- Bien Hoa Joint Stock Company (SBT) transferred 61 million treasury shares toits two board members, Huynh Bich Ngooc and Dang Huynh Uc My.
The company collected 1.14 trillion VND fromthe sale, 3.6 percent higher than the amount spent to buy back 61 millionshares in April 2018.
The Asia Commercial Joint Stock Bank (ACB)last month announced a plan to sell more than 35 million treasury shares toraise capital. The selling price is expected to be 48 percent higher than theprice the bank paid for the shares./.
VNA
