• July buyback activity typically declines seasonally in Singapore with the majority of stocks on the cusp of reporting 1HFY (ended 30 June) results. This meant July saw just 10 primary-listed stocks buy back their shares with a total consideration of S$11 million, compared to 28 stocks and a total consideration of S$94 million in June. 
   
• The Hour Glass led the July buyback consideration tally in July, commencing a new mandate, while also completing its preceding mandate which saw the group buy back 1.04 per cent of its outstanding shares (excluding treasury shares), in a relatively short period of six weeks from 17 June to 27 July.
   
• Since The Hour Glass reported its FY21 financial results on 20 May, the stock price has rallied from $0.96 to S$1.54 at the end of July, while the 10 weeks spanning 21 May to 30 July saw the average daily turnover of the stock increased more than 12-fold compared to the 20 weeks spanning 1 Jan to 20 May.
   
• STI Stocks - OCBC, Wilmar, SGX, ST Engineering and Keppel have led the S$379 million in total buyback consideration of Singapore’s primary-listed for the past seven months, contributing S$308 million (81%) of the total consideration. Just one of these five stocks, ST Engineering conducted buybacks in July.

For the month of July, 10 primary-listed stocks on SGX bought back their shares, with a total consideration of S$11.2 million. This compared to 28 primary-listed stocks buying back S$94 million in total consideration in June (click here for more) and 13 SGX primary-listed stocks bought back shares for a total consideration of S$3 million back in July 2020. Seasonally, buyback activity typically declines in July in Singapore with the majority of companies on the cusp of reporting 1HFY (ended 30 June) financial results.

As discussed here, the 1.2% gain of the Straits Times Index (“STI”) in July brought its price gain over the first seven months to 11.4%, with dividends boosting the total return to 13.2%, ranking the STI among the top three performing APAC benchmarks for the past seven months which include the TAIEX and Nifty 50.

The combined AUM of the SPDR® Straits Times Index ETF and the Nikko AM Singapore STI ETF ended July 2021 at S$2.24 billion, compared to S$2.08 billion at the end of December 2020 and compared to S$1.10 billion at the end of December 2019, with the unit creations and redemptions generating S$900 million of net inflows into the two ETFs over the last 19 months.

The five stocks that led the buyback consideration tally for primary-listed Singapore stocks in the first seven months of 2021 are all STI stocks - Oversea-Chinese Banking Corporation, Wilmar International, Singapore Exchange, Singapore Technologies Engineering and Keppel Corporation. Together the five stocks have contributed S$308 million, or 81% of the S$379 million total buyback consideration for the past seven months. The S$379 million represented 0.04% of the S$903.8 combined market capitalisation of all stocks listed on SGX at the end of July. Just one of the five stocks, Singapore Technologies Engineering conducted buybacks in July.

The Hour Glass - Buybacks, Turnover and its FY21 High Watermark

The Hour Glass led the buyback consideration tally in July, with 5.7 million shares bought at an average price of S$1.451 per share.

On 27 July, The Hour Glass completed its preceding buyback mandate with a start date of 28 August 2020, which saw The Hour Glass buy back 7,338,700 shares or 1.04 per cent of its outstanding shares (excluding treasury shares), in a relatively short period of six weeks from 17 June to 27 July. The Hour Glass then commenced a new buyback mandate on 28 July, buying 600,000 shares at an average price of S$1.45 per share. The current buyback mandate, approved at the 28 July AGM, is for The Hour Glass to buy back 10% of its 696 million outstanding shares (excluding treasury shares, and as of 28 July).

Over the first seven months of 2021, the share price of The Hour Glass almost doubled to S$1.54, from S$0.80 at the end of 2020.

After the 20 May close, The Hour Glass reported its FY21 (ended 31 March) results, which saw the Group record a 1% decline in sales to S$742.9 million, whilst profit-after-tax rose 9% to a new high watermark of S$84.5 million. During FY21, the Group successfully acquired 139 Collins Street in Melbourne for A$68.0 million, which is a heritage-listed retail and office building presently tenanted by Louis Vuitton. The company noted in July that the best performing watch brands have continued to enjoy intensified demand well into 2021, reflected in record-low inventory levels and the multiple increase of interests being registered for their most sought-after watches. The client-focused retail enterprise also noted that drivers of this demand include, firstly, watches transcending the luxury goods market, increasingly viewed as a serious collectible and even a store of value, secondly, its clients often cite the fact that a watch is a substitute for what would have been spent on travel, and thirdly, crisis or not, the broader segment of middle-class Singaporeans remain financially sound.

The bulk of the share price gains over the first seven months of 2021 also came after the S$0.96 close on 20 May, which coincided with the average daily turnover of stock for the 21 May through to 30 July reaching S$1.0 million a day. This represented a more than 12-fold increase from S$80,000 a day from 1 January to 20 May.  

The table below summarises the buyback transactions of the 10 stocks that conducted buybacks in July. The table is sorted by the value of the total consideration amount for the month, which combines the amount of shares or units purchased and the purchasing price of the transactions.

*Note The Hour Glass commenced a new buyback mandate in July. Source: SGX (Data as of 30 July 2021)

Share buyback transactions involve share issuers repurchasing some of their outstanding shares from shareholders through the open market. Once the shares are bought back, they can be converted into treasury shares, which means they are no longer categorised as shares outstanding. Motivations for share buybacks can include employee compensation plans (such as share option schemes or employee share purchase plans) or long term capital management. Buybacks can pick up amidst market declines that are driven by broader moves on international macroeconomic developments.

Share buyback information can be found on the company disclosure page on the SGX website, using the Announcement category and sub-category of Share Buy Back-On Market (click here). As best practice, companies should refrain from buying back their shares during the two weeks immediately before semi-annual financial statements and one month immediately before the full-year financial statements.