Singapore banks were actively buying back their shares amid the market turmoil, as valuations of their shares tumbled to below book value in recent days.
DBS was the most active amongst Singapore-listed stocks in share buybacks, spending a whopping S$368 million on share buybacks since the start of March, more than triple the bank's total of S$103 million for all of 2019, data from the Singapore Exchange showed.
Share buybacks by DBS comprise more than 80 percent of the total S$450 million in share buybacks by listed companies in Singapore, according to share buyback data since the beginning of March through to last Thursday. In comparison, share buybacks recorded in all of March last year tallied up to just S$54 million.
Share Prices have Tumbled
UOB also participated in share buybacks this time, spending S$16.2 million since the start of March, even though it did not do so last year. OCBC spent S$19.2 million on share buybacks over the same period as well.
The rise in share buybacks comes at a time when local banks' shares have been hit due to the coronavirus outbreak, sliding by about 25 percent to close to 30 percent since the start of the year. DBS's shares have been hit harder than its peers due to its greater sensitivity to rates.
Limited Buybacks
For Singapore-listed companies, share buybacks are limited to 10 percent of the total number of issued ordinary shares. Listed firms here seek a mandate from shareholders each year to be allowed to execute share repurchases.
Companies perform share buybacks for various reasons, including holding shares to be issued to senior executives as part of their pay packages. It can also be read as a signal that the companies believe their shares are undervalued, using book value as an indicative benchmark.
