Statistics show that since 2005, Hong Kong stocks have gone through five rounds of buying spree, all of which started when the market experienced a significant decline and valuations were at a low level. Since this year, Hong Kong share repurchases have been led by Internet Dragon (13.62, 0.00, 0.00%). Tencent Holdings (307.2, 0.00, 0.00%) has repurchased more than HK $40 billion this year. Xiaomi and Kwai - W (52.95, -0.10, -0.19%) are also among the top ten repurchases. In addition, some high-performance consumer companies and state-owned enterprises that have rarely repurchased in the past have also become the main force in repurchase.

Leading companies make large-scale repurchases

According to Choice data, the repurchase amounts of Hong Kong stock companies in 2021 and 2022 reached HKD 38.1 billion and HKD 104.9 billion respectively. As of now, the total amount of Hong Kong stock repurchases since the beginning of this year has reached HKD 111.366 billion, exceeding the total amount of last year.

Since the beginning of this year, Hong Kong stock repurchases have been led by leading companies. Leading companies not only have a high frequency of repurchase, but also a large scale of repurchase. Tencent Holdings, AIA Insurance (63.05, -0.50, -0.79%), HSBC Holdings (60.15, -0.15, -0.25%), Great Wall Motors (10.34, 0.04, 0.39%), Changshi Group (37.35, -0.15, -0.40%), and China Petroleum (4.84, -0.01, -0.21%) Chemical Co., Ltd. (3.83, -0.02, -0.52%) are among the top 6 repurchases in total this year, with repurchases of HKD 41.804 billion, HKD 26.762 billion, HKD 19.425 billion, HKD 2.198 billion, HKD 1.967 billion, and HKD 1.431 billion, respectively. The total repurchase amount of the six companies mentioned above reached HKD 93.587 billion, accounting for 84.04% of the total repurchase amount of Hong Kong stocks since the beginning of this year.

Industry insiders believe that a new phenomenon has emerged in the Hong Kong stock repurchase market: state-owned enterprises that have rarely repurchased in the past have also started to increase their repurchase efforts in recent years, such as China Petrochemical Corporation and COSCO Shipping (6.97%, -0.02%, -0.29%). This indicates that from the perspective of company management, the stock prices of these companies are also attractive.

On December 8th, COSCO Shipping Holdings repurchased 2.125 million shares at a cost of HKD 14.765 million. Since the beginning of this year, COSCO Shipping has repurchased approximately HKD 578 million of its Hong Kong shares, with a total of approximately 76 million shares repurchased. China COSCO Shipping Holdings has implemented a dual approach of repurchasing and increasing its holdings. The company introduced on the interactive platform that its major shareholder, COSCO Shipping Group, implemented two holdings increases from 2021 to May 2023, totaling RMB 4.883 billion; The increased holdings include A-shares and H-shares. The implementation of a series of capital operation and market value maintenance measures reflects COSCO Shipping's efforts in achieving long-term stable returns for investors.

The Hang Seng Index (16162.819, -38.67, -0.24%) indicates that the potential motivation for corporate buybacks is usually related to factors such as capital structure, financing costs, and book cash levels. The high repurchase prices in the Hong Kong stock market may indicate that companies believe their stock prices are undervalued.

New economy companies frequently take action

Leading companies in the new economy have also joined the repurchase team. On December 8th, Miniso (38.05, 0.35, 0.93%) repurchased 398600 shares, while Skyworth Group (2.91, 0.01, 0.34%) repurchased 2.8 million shares. Yum Brands China (309.2, -1.20, -0.39%), Kwai W and Xiaomi Group W (14.44, -0.12, -0.82%) also implemented repurchase on the same day.

Some consumer companies have maintained good performance growth, and repurchase plans are also ongoing. According to statistics, from November 27th to December 8th, jewelry leader Chow Tai Fook (10.42, 0.04, 0.39%) used HKD 124 million to repurchase 11.2278 million shares in the secondary market. On November 23, Chow Tai Fook released data for the first half of the 2024 fiscal year, showing that in the first six months ending at the end of September this year, the net profit of Chow Tai Fook Group increased by 36.25% year-on-year to HKD 4.62 billion.

Some companies not only improve profitability by optimizing costs and improving operational efficiency, but also boost market confidence through buybacks. Taking Yihai International (11.32, 0.08, 0.71%) as an example, with the continuous recovery of catering consumption, the company's performance has also entered a growth range. In the first half of this year, Yihai International achieved a net profit of 377 million yuan, a year-on-year increase of 27.3%. As of December 11th, Yihai International has repurchased nearly HKD 200 million so far this year. From 2020 to 2022, the company's net profit was RMB 983 million, RMB 858 million, and RMB 816 million, respectively. Industry insiders believe that as Yihai International's performance enters a recovery turning point in the first half of this year, coupled with the company's active repurchase, it is conducive to improving investor returns.

In the first half of this year, the "first trendy stock" of Pop Mart (20.4%, -0.05%, -0.24%) achieved a net profit of 477 million yuan, a year-on-year increase of 43.3%, exceeding the full year of last year; Its overseas business continues to show a high growth trend, with revenue increasing by nearly 140% year-on-year. On October 24th, Bubble Mart disclosed its latest business situation for the third quarter, showing that the company's overall revenue (unaudited) for the third quarter increased by 35% to 40% year-on-year. As of December 11th, Bubble Mart has repurchased approximately HKD 350 million.

Industry insiders believe that the repurchase of new economy companies is often influenced by market conditions. The repurchase amount of new economy companies has significantly increased, reflecting the company's need to maintain investment value in the context of abundant cash flow. The Hong Kong stock repurchase rules are basically in line with major global markets, and regulatory authorities are still working on revising the share repurchase rules to simplify the repurchase process and improve efficiency. The requirements for the upper limit of repurchase ratio, repurchase price and quantity, non designated counterparties, and funding sources of Hong Kong listed companies may be revised Upon inspection, it is expected that a large number of new economy companies will initiate repurchase plans in the future Wang Rongkun, CEO of Huaxia Securities in Hong Kong, said.