Hong Kong stocks start a buyback boom! The amount of buybacks this year has exceeded last year by 80%. Why has the momentum not diminished?
By Liu Chenguang LCG
Drew Bernstein, co-founder and co-chairman of Marcum Asia, is quoted regarding Hong Kong buybacks.
“Bernstein shared that buybacks allow the company to increase earnings per share by reducing the number of shares (the denominator), even if net income remains relatively flat. Some companies may use buybacks as a way to compensate for the issuance of shares under a stock option plan. Additionally, stock buybacks are a relatively efficient way to return capital to shareholders and, unlike dividends, do not require an ongoing commitment of cash every quarter. The downside, of course, is that investors may think the company doesn’t have many compelling investment opportunities.”