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Listed companies rush to buy treasury stocks
Many listed companies on both Hanoi Securities Trading Centre (HASTC) and HCM City Stock Exchange (HOSE) have registered to buy big volumes of shares in an attempt to prevent the share items from further decreasing.
This is not the first time listing companies have bought treasury stocks, but they have never planned to buy such big volumes of shares so far. This has been surprising even investors, though they were informed about that before.
VIP, for example, has been purchasing 1mil shares since March 12, DPM 1mil since March 14, SAM 650,000 March 12, SJS 500,000 March 12, KHA 700,000 March 12, TDH 300,000 March 12, and SJ1 300,000 March 14. Prior to that, KDC, ANV and TPC also announced they would buy 1mil shares of their own companies.
Listing companies are rushing to buy stocks at this moment in an attempt to stop the share price slides. The chairman of a listing company said: “We find our shares’ prices falling to below the actual value, and the management board has decided to buy stocks to prevent the prices from falling down further.”
Do Van Trac, General Director of SAM, who is also the Chairman of the Listing Companies’ Association, said that the purchase of treasury stocks is considered a good technical measure to prevent the share prices from falling further. Investors will feel safe when they find listing companies buying their companies’ shares.
Vu Van Minh, an investor on EPS trading floor, said that he bought 2,000 TDH shares because “I think that if TDH is suffering losses, its management board would not buy TDH shares as it is doing now.”
The treasury stock purchases have shown the desired effects: the prices of many share items, namely VIP, KHA, SAM, TDH, and DPM, either increased or did not decrease further, though the VN Index slightly decreased in the last trading session last week.
Barriers
The deputy chairman of a company complained that his company needs to buy shares faster, but it cannot due to the regulations on limiting the share volumes companies can buy at every trading session.
“The State Securities Commission (SSC) and HOSE need to change the regulations in order to recover the stock market,” he said.
SSC stipulates the transaction volume at every trading session must not be higher than 3-5% of the total share volumes companies register to buy. Meanwhile, HOSE stipulates that the purchasing volume of the next trading session must not be higher than 10% of the previous trading session’s volume.
For example, VIP registers to buy 1mil treasury stocks, and it can buy 30-50,000 shares at every trading session, according to SSC’s regulations. Meanwhile, according to HOSE’s regulations, VIP can buy 50,000 shares at maximum at the first trading session, and 5,000 shares (10%) at maximum at the next session.
Doubts exist over the share purchases
The purchase of treasury stocks proves to be a necessary move at this moment to rescue the stock market. However, investors still have doubts over the transparency of purchase deals.
Vu Thi Hai Ha, an investor on ACBS trading floor, wondered if someone could make corrupt use of the purchases to earn money. In fact, many investors ordered some share items before the news about the treasury stock purchases was spread.
Hai said that the wife of the deputy chairman of V. Company announced she would buy V shares 10 days before the company officially released the plan to buy treasury stocks, while a key shareholder of V. Company announced he would buy 500,000 V shares 8 days before.
Meanwhile, other investors have doubts about if listing companies will implement their plans to buy treasury stocks as they promise. Previously, VFM’s management board once did not buy 150,000 VF1 fund certificates as it announced, and VFC did not buy 200,000 VFC.
VNN
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