Companies have continued to buy up their own shares this month despite prices recovering from October's fall.
Five firms bought back nearly 4.2 million shares worth a total of $9.1 million in the first week of November, according to a Singapore Exchange (SGX) My Gateway report.
Water treatment firm Hyflux was the most active, buying back 2.21 million shares at a total cost of about $2.21 million.
Construction and real estate firm Lian Beng was next with a total of 644,000 shares bought for about $439,000 while lender OCBC bought about 550,000 shares for $5.5 million.
Lifestyle products group Osim International snapped up 526,000 shares for around $900,000.
Marine solutions provider XMH rounded up the five, buying back 256,000 shares at $72,730.
There were 112.3 million shares worth $96.6 million repurchased by 29 firms last month.
Fundsupermart general manager Wong Sui Jau has noticed a trend of local firms undertaking buybacks.
"Traditionally, share buybacks are done by Western companies, especially firms from the United States, but the practice is becoming more common here," said Mr Wong.
Share buybacks are used by companies to return spare cash to shareholders by buying shares on the open market.
This also reduces the share base which should push up prices as valuation ratios like earnings per share will be increased.
Mr Wong said share buybacks may be becoming more popular as, unlike issuing dividends, companies will likely face less shareholder pressure if they slow down or stop the buyback process.
"Between share buybacks and paying cash in dividends, once a firm starts to pay a higher rate of dividends regularly, shareholders would expect that to continue, so share buyback faces less of a backlash," he added.
Some companies may, in general, repurchase shares as they feel the price is undervalued, noted Mr Wong.
Hyflux's and Osim's share prices, for example, have fallen over the past year.
Hyflux closed at 99.5 cents yesterday, down 15 per cent from the closing price of $1.17 at the end of last year.
Osim shares closed at $1.80, down 21.7 per cent from the closing price of $2.30 at the end of last year.
LESS SHAREHOLDER PRESSURE
Between share buybacks and paying cash in dividends, once a firm starts to pay a higher rate of dividends regularly, shareholders would expect that to continue, so share buyback faces less of a backlash.
- Fundsupermart general manager Wong Sui Jau
This article was first published on November 11, 2014.
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