Following the largest wave of buybacks in nearly 20 years last year, the buybacks of Hong Kong listed companies have accelerated sharply this year.

As of April 15, the total amount of repurchases of listed companies in Hong Kong this year reached about HK $16.5 billion, an increase of 140 per cent over the same period last year and nearly half of the total for the whole of last year, according to Wind. In the first half of April alone, the total amount of repurchases of Hong Kong listed companies reached about HK $4.8 billion, accounting for 29 per cent of the total repurchase volume this year.

Market analysts believe that buybacks demonstrate the confidence of the company's management and help stabilize investor sentiment and repair valuations when market conditions are extremely volatile, highlighting the investment value of Hong Kong stocks.

The repurchase speed was accelerated, and the repurchase rate of 4 companies exceeded 1 billion.

Since February, under the influence of multiple external factors, such as the situation in Russia and Ukraine and the Fed's interest rate hike, Hong Kong stocks have been on a roller coaster most of the time, and the Hang Seng Index has fallen below the key point many times. But at the same time, the repurchase scale of listed companies has also reached a new high.

According to Wind data, a total of 121 listed companies in Hong Kong carried out repurchases this year, with a total of about 2 billion shares and HK $16.5 billion respectively, an increase of 78 per cent and 140 per cent respectively over the same period last year. The total repurchase amount is nearly half of the total repurchase amount for the whole of last year. If the current buyback scale is maintained in the next few months, the total amount of Hong Kong stock buybacks this year is expected to exceed that of last year, reaching an all-time high.

Among them, the repurchase amount of four listed companies, Tencent, AIA Group Limited, XIAOMI Group and China Gas, exceeded HK $1 billion, accounting for 67 per cent of the total. China Mobile Limited, Wuxi Biologics and Sansheng Pharmaceuticals have all repurchased more than HK $500m, while seven other listed companies have repurchased more than HK $100m.

Compared with last year, not only the overall repurchase amount has doubled, but also the repurchase intensity of individual listed companies has been significantly increased. In the same period last year, only the repurchase amount of XIAOMI Group exceeded 1 billion Hong Kong dollars, and the total repurchase amount of the top 10 listed companies was about 6.06 billion Hong Kong dollars, less than the repurchase scale of Tencent and his family this year.

In April, after the quiet period of financial results, Hong Kong listed companies significantly accelerated the pace of buybacks. In just half a month, the total repurchase amount of 50 Hong Kong listed companies has reached about HK $4.8 billion, accounting for 29% of the total repurchase volume this year. Top 10 Hong Kong share buybacks in 2022, data source: Wind, data as of April 15

Tencent, AIA Group Limited and XIAOMI remained in the top three, with repurchase amounts of about HK $2.4 billion, HK $1.3 billion and HK $400m respectively, with a total repurchase amount of HK $4.2 billion, accounting for nearly 90 per cent of the total buybacks in April, far exceeding other listed companies.

Technology stocks took the lead, and Tencent's buyback volume reached 2.3 times last year.

From an industry point of view, the 10 listed companies with the highest repurchase amount this year are scattered in a number of different industries, but technology stocks are still the main buyback force, followed by insurance, public utilities and pharmaceutical industries. In the same period last year, XIAOMI Group was the only technology stock in the top ten buybacks.

Since March, a number of Chinese stocks have announced buyback plans or strengthened their existing repurchase plans, and the repurchase scale of technology stocks is also in the forefront of the Hong Kong stock market.

In late March, BABA announced that he would expand the size of the buyback from $15 billion to $25 billion, the largest repurchase in the history of Chinese stocks and the start of a new wave of buybacks. XIAOMI Group subsequently announced that the board of directors formally decided to exercise the share Repurchase mandate to repurchase shares in the open market at a maximum amount of HK $10 billion from time to time.

Last year, XIAOMI Group has become the "repurchase king" of the Hong Kong stock market. Since March last year, it has bought back about 340 million shares, totaling more than 8.4 billion Hong Kong dollars. As of April 15 this year, XIAOMI Group has bought back another 20 times, with a total repurchase amount of HK $1.2 billion.

Internet giant Tencent's buyback efforts have also increased significantly this year. Last year, Tencent began to buy back shares frequently in August, buying back a total of 5.58 million shares for the whole year, at a cost of HK $2.6 billion. In the past half a month this year alone, Tencent has bought back for eight consecutive trading days, with a total repurchase amount of HK $2.4 billion, which is close to the repurchase scale for the whole of last year.

As of April 15, Tencent has made a total of 24 buybacks this year, each of which is worth about HK $200 million to HK $300 million, with a total of 15.31 million shares, with a total repurchase amount of HK $6.1 billion, which is 2.3 times that of last year.

CITIC believes that Tencent's continuous buybacks since March 25 show confidence in the steady growth of core business in the future. The bank believes that Tencent's share price has entered the value investment range, and there is still room for continuous upward growth in the medium to long term. In terms of fundamentals, Tencent continues to invest in key areas such as international games, video numbers, cloud and enterprise software, which is expected to form a stronger competitiveness. With the introduction of Internet-related regulatory policies, the future industry policy guidance is expected to become clearer.

Under the buyback tide, Hong Kong stocks have gradually entered a period of repair.

Since 2005, Hong Kong stocks have experienced five rounds of buybacks when the market has fallen sharply and valuations are low.

Xun Yugen, chief economist of Haitong Strategy, pointed out that summing up these five rounds of buybacks, we can find that at the beginning of the Hong Kong stock buyback wave, the market has often fallen by a relatively small margin, and the valuation has also reached a relatively low level. As the market continues to fall and valuations fall further, the degree of buybacks also continues to increase. On the whole, all the stocks in Hong Kong can stabilize and rebound after the buyback tide, and the information technology sector performs best after the buyback tide, and can achieve better absolute returns and excess returns. In the short term, the Hang Seng Index performed mediocre. In the medium to long term, especially within a year after the end of the buyback wave, the Hang Seng Index tends to bring better investment returns.

Sino-Thai International believes that buybacks, the resumption of Hong Kong economic activities and policy policies have brought multiple benefits to Hong Kong stocks. Listed companies accelerate the repurchase of shares, increase market trust and provide motivation to stabilize stock prices. On the other hand, the recent epidemic in Hong Kong has obviously eased, and economic activities have resumed in three stages since April, which is conducive to the valuation and repair of local concept stocks. On the mainland side, with the 316 Finance Committee and the 321 National standing Committee saying that they want to provide strong support for macroeconomic stability, it is expected that there will be a period of intensive policy in the next month or two, which will help to rebuild investor trust.

CICC believes that the buyback reflects that the share price is already attractive from the company's management point of view. From historical experience, the increase in stock buybacks may mean that the market value is gradually emerging, and stock buybacks are often the bottom signal of a medium-term market, which may provide support for the medium-term performance of related stocks.

Recently, as more listed companies have joined the buyback army, CICC believes it will help boost investor sentiment and expects more companies to announce share buybacks. In addition, as the fifth wave of the epidemic in the Hong Kong Special Administrative region abates and local economic activity gradually picks up, Hong Kong's local stocks, such as the consumer and banking sectors, are also expected to repair.

Hang Seng Qianhai Fund believes that Hong Kong stocks will maintain a volatile market in the short term, but looking ahead is still expected to achieve a certain degree of valuation repair market, although there may also be fluctuations during the period. The progress of regulatory policies and geo-tensions abroad, the recurrence of domestic epidemics and their impact on economic growth, and the timing of policies to stabilize growth will be some key variables that will affect market trends in the future.

In terms of the technology sector, after previous adjustments, the Hang Seng Qianhai Fund believes that its valuation is already attractive, and from a regulatory risk point of view, external uncertainties are expected to improve marginally in 2022. At present, we can use long-term thinking to carry out a short-and medium-term allocation, looking for opportunities in oversold plates. Standing in the one or two-year cycle, opportunities far outweigh risks. The current low level is also a better opportunity for Hong Kong stocks to lay out on the left side.

CICC also believes that Hong Kong stocks will remain volatile in the short term, but there is no lack of positive factors in the market. these include the fact that valuation levels are already very attractive, more companies are planning to expand share buybacks or pay high dividends, and the peak of the local epidemic in Hong Kong is over.