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Treasury stocks not as prized
This year a lot of companies registered to buy treasury stocks in big quantities and this raised expectations of the recovery of stock prices. However, it seems that the result has not been as encouraging as expected.
KimEng (KEVS) Securities Company has recently released a report on purchases of treasury stocks of companies listed on the HCM City Stock Exchange.
The report said that since the beginning of the year, 61 listed companies have registered to buy treasury stocks. However, only 21 have purchased 100% of the registered volume. Six other companies purchased 70-99% of the registered volume, while nine companies purchased 50-69%, and 20 companies, less than 50%. Some companies have been found as registering to buy treasury stocks, but purchasing none or very few.
When deciding to purchase treasury stocks, companies aim to stabilise their stock’s prices. However, in fact, this has not helped much in stabilising prices. The case of Ben Tre Forestry and Seafood Product Import & Export Company (FBT) is an example. The company registered to purchase 1.5mil treasury stocks from September 30 to December 30, while the purchases were wrapped up on November 20. FBT price was VND22,200/share on September 30, and VND17,200/share on December 19 closing.
Analysts say that treasury stock purchases could not resist the downturn of the market, making the main goal of the purchases irrelevant.
According to KEVS, companies have the right to decide whether to purchase treasury stocks, and that the move will, to some extent, help reassure investors, but it will not help much in stabilising the stock prices. Meanwhile, it is really difficult for companies to arrange enough money to purchase the stocks, especially in the current difficult period.
“In such a very sensitive market, the purchase of treasury stocks proves to be not a move powerful enough to lift stock prices,” KEVS said.
Some companies which have low percentages of purchased treasury stocks
|
Share items |
Purchased share volume |
Transaction time |
|
|
Registered |
Implemented |
% of implemented |
|
|
CYC |
158,000 |
0 |
0 |
July 17-Oct 17 |
|
PPC |
1,000,000 |
80,000 |
8 |
July 7- Oct 7 |
|
MCP |
200,000 |
16,900 |
8.5 |
April 10 – July 10 |
|
PIT |
500,000 |
45,000 |
9 |
July 15 – Oct 15 |
|
HAP |
1,000,000 |
151,100 |
15.1 |
May 19 –August 20 |
|
DQC |
200,000 |
35,000 |
17.5 |
March 24 – June 20 |
(Source: KEVS)
DTCK
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