Relay of Treasury Stock Buybacks...Will It Boost Securities Firms' Stock Prices?

SK·KTB Investment & Securities and Others
SK Securities Tops with 11%+ Returns
Meritz, KTB, Mirae Asset Follow in Order

[Asia Economy Reporter Park Jihwan] Recently, the securities industry has been actively acquiring treasury shares. In mid-last month, SK Securities and KTB Investment & Securities announced their decisions to acquire treasury shares, following earlier announcements from Mirae Asset Securities (September) and Meritz Securities (June), both of which are currently in the process of purchasing shares.

According to the financial investment industry on the 4th, KTB Investment & Securities disclosed a plan on the 14th of last month to repurchase treasury shares worth 3 billion KRW. They plan to acquire 1,290,313 shares of treasury stock over one year until October 14 of next year. SK Securities decided to acquire treasury shares worth 16.4 billion KRW a day earlier than KTB Securities. They plan to directly acquire 19 million common shares through on-market purchases over about three months until January 13 of next year. Mirae Asset Securities decided on September 16 to repurchase treasury shares worth 101.3 billion KRW. They plan to purchase 10 million common shares and 3 million preferred shares through on-market purchases by the 16th of next month. Meritz Securities also decided to invest a total of 200 billion KRW in treasury share acquisitions, with 100 billion KRW each in March and June. Currently, they are proceeding with the treasury share repurchase plan announced in June.

Repurchasing treasury shares by listed companies is considered one of the representative shareholder-friendly policies. When treasury shares are repurchased and then canceled, the circulating supply in the market decreases, increasing the possibility of stock price appreciation.

Looking at the current stock prices compared to the treasury share repurchase announcement dates, all these securities firms showed a stock price boost effect from the repurchases. In the case of SK Securities, after the treasury share repurchase announcement, the stock price rose on all but 4 out of 15 trading days up to the previous day, showing the highest stock price increase effect. During this period, the stock price rose from 878 KRW to 982 KRW, an increase of 11.8%. Meritz Securities’ stock price rose 4.2% after the June treasury share acquisition announcement. KTB Investment & Securities’ stock price increased by 4.1% to 6,350 KRW compared to the closing price of 6,100 KRW just before the treasury share acquisition announcement.

Mirae Asset Securities’ stock price closed at 8,750 KRW as of the previous day, a slight increase of 0.8% from the 8,680 KRW at the time of the treasury share repurchase announcement, showing little difference. However, considering that major competitors such as Samsung Securities (-3.9%), Korea Financial Group (-0.8%), Kiwoom Securities (-9.8%), and NH Investment & Securities (-2.6%) saw their stock prices decline during the same period, it is evaluated that the intended purpose of stock price defense was achieved.