Value-Up and Stock Market Slump Lead to Threefold Increase in Share Buyback Volume

77 Cases of Treasury Stock Acquisition Disclosures This Year
18 More Than Same Period Last Year
Acquisition Amount 9.7522 Trillion KRW... 3.1685 Trillion KRW Same Period Last Year
Increased Treasury Stock Purchases Due to Value-Up Program and Stock Market Slump

The scale of share buybacks this year has more than tripled compared to the same period last year. This is because more companies have launched shareholder return programs through corporate value-up initiatives, and as the stock market has continued to slump since the second half of the year, companies are increasingly taking steps to boost their stock prices.

According to the Korea Exchange on the 22nd, the number of share buyback disclosures in the KOSPI market reached 77 as of the 20th this year, an increase of 18 from 59 during the same period last year. The disclosed acquisition amount for share buybacks was 9.7522 trillion won, more than three times the 3.1685 trillion won recorded in the same period last year.

The increase in share buybacks this year can primarily be attributed to corporate value-up programs. As the government promotes value-up programs to enhance corporate value, companies have actively engaged in shareholder returns. When companies repurchase their own shares, the number of shares circulating in the market decreases, which raises the value of shares held by shareholders.

The sluggish stock market situation has also influenced share buybacks. With stock prices underperforming, companies are attempting to boost their stock prices through share repurchases and cancellations.

In particular, Samsung Electronics recently announced a bold plan to repurchase shares worth 10 trillion won after its stock price fell to the so-called "40,000 won electronics" level. Samsung Electronics plans to repurchase shares worth 10 trillion won in installments over the next year. First, it disclosed that it will buy 50,144,628 common shares and 6,912,036 other shares over three months until February 17 next year. The expected acquisition amount is about 3 trillion won, including 2.6827 trillion won for common shares and 317.2 billion won for preferred shares. Following the share buyback announcement, the stock price, which had fallen below 50,000 won, recovered to around 56,000 won.

Kim Sun-woo, a researcher at Meritz Securities, explained, "Since the buyback is conducted through on-market purchases in the securities market rather than through a share trust format, only the three-month plan has been disclosed. Samsung Electronics has also previously disclosed buyback plans in three-month installments during past repurchase periods."

Roh Dong-gil, a researcher at Shinhan Investment Corp., said, "From a stock price perspective, share buybacks are favorable. Since 2010, during three Samsung Electronics share buyback periods, the absolute returns were 7.3% from 2014 to 2015, 14.3% from 2015 to 2016, and 28.9% from 2017 to 2018, respectively."

Celltrion has initiated its fifth share buyback this year. The day before, Celltrion announced an additional share repurchase worth about 100 billion won. The planned acquisition quantity is a total of 583,431 shares, which will be purchased through on-market transactions starting from the 22nd. The purpose of the acquisition is to stabilize the stock price and enhance shareholder value. Previously, Celltrion decided on share buybacks worth approximately 75 billion won each in March, April, and June, and about 100 billion won in October. With this additional buyback, Celltrion will acquire about 2,394,031 shares this year, totaling approximately 430 billion won. Following the announcement of the additional buyback, Celltrion's stock price rose by 1.3% the previous day.

With the ongoing box range market and the upcoming special revision of the Korea Value-Up Index next month, the rush of corporate share buybacks is expected to continue.