Source: GT    Published: 2024-06-13

More than 1,500 listed companies in China's A-share market have announced buybacks so far this year, sending a positive signal to the market while underscoring their confidence in a sustained economic recovery.
As of Thursday, at least 1,544 A-share companies had announced share buybacks valued at more than 93 billion yuan ($12.8 billion), a record high, according to information provider Wind.
Shanghai-listed Liaoning Port Co said on Wednesday night that it will repurchase at least 100 million yuan worth of shares. The company said in a filing with the Shanghai Stock Exchange that the move is made out of confidence in the company's sustainable development and recognition of its value.
As an important countercyclical measure in capital market operations, stock buybacks send a signal that a company's shares are undervalued and help elevate investors' confidence, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the Global Times on Thursday.
Buybacks help stabilize the market, since metrics such as earnings or dividends per share rise when the number of outstanding shares falls, Dong said, calling for listed companies to cancel repurchased shares rather than using them in employee stock option plans.
This round of intensive stock buybacks came after the State Council, the country's cabinet, released a new guideline on strengthening capital market regulation in April.
The new guideline urged rigorous sustained oversight of listed firms, noting that authorities should crack down on illegal shareholding reductions, boost listed companies' investment value with measures like stock buybacks, and tighten regulations on cash dividend payments by listed firms.
More A-share buybacks are likely during the rest of the year, Li Daxiao, a senior market observer, told the Global Times on Thursday.
Li expressed full confidence in China's stock markets in the long run. Amid China's continuous economic recovery and targeted policies to promote the healthy development of its capital market, Chinese stock markets will gradually stabilize, he said.
Many international organizations and foreign financial institutions have upgraded China's GDP forecasts. In its latest Global Economic Prospects report released on Tuesday, the World Bank upgraded China's 2024 growth forecast to 4.8 percent from 4.5 percent in January.
On Thursday, the benchmark Shanghai Composite Index closed down 0.35 percent to 3,028.92 points.
Li said that a base of 3,000 points is solid. On the one hand, long-term capital is flowing into the A-share market in a faster pace thanks to targeted policies to strengthen reform and opening-up of the country's capital market. On the other hand, there is still possibility that the US Federal Reserve will start to cut interest rates this year, which is conducive for global liquidity.
Dong said that the authorities should continue to boost structural reform in the capital market so as to empower the development of quality listed companies, while delisting companies that no longer meet the standards for the high-quality development of the capital market.
International investment banks have become more positive on China's stock market. UBS analysts said in a recent note that they believe China's stock market is strengthening to a lasting recovery from a technical rebound. As a result, they said they have turned bullish on the market and further raised their year-end target for the MSCI China Index to 69, which would be a rise in the mid double digits from the current level.