As a key tool for stabilizing market expectations and boosting investor confidence, share buybacks by listed companies have long been a focal point of market attention.
According to Wind data, from the beginning of this year through October 11, A-share listed companies have executed share buybacks totaling approximately 132.7 billion yuan, an increase of 17.66% compared to the same period last year.
"The year-on-year growth in share buybacks by A-share listed companies this year reflects the growing maturity of normalized capital operation tools. Buybacks have shifted from being a 'passive defense and temporary market rescue' measure to a 'normalized tool for market value management and shareholder returns,' indicating a notable improvement in listed companies' ability to manage their balance sheets and equity capital," said Li Xiao, deputy director of the Capital Market Supervision and Reform Research Center at the Central University of Finance and Economics, in an interview. He noted that corporate managers typically judge their company's intrinsic value ahead of secondary-market financial investors; the surge in buyback amounts suggests that corporate managers believe current stock prices offer a high margin of safety and attractive allocation value.
Real Money Sends a Confidence Signal
Listed companies are leveraging share buybacks as a normalized capital operation tool to continuously release positive signals to the market.
Looking at monthly buyback amounts, four of the first nine months of this year saw buyback amounts exceeding 15 billion yuan. Among them, July set a monthly peak for the year at 21.655 billion yuan. In terms of corresponding market performance, the A-share market experienced a deep correction in July. Wind data shows that the Shanghai Composite Index fell 6.4% that month, the Shenzhen Component Index dropped 16.57%, the ChiNext Index declined 22.49%, and the STAR Composite Index plunged 29.29%.
Similarly, influenced by external market volatility and other factors, the A-share market saw another correction in September. In response, some listed companies continued their counter-trend buyback logic, with buyback amounts reaching 19.829 billion yuan, the second-highest monthly figure for the year, further highlighting their firm stance on seizing low-valuation windows and using buybacks to support their stock prices. Among them, several technology-related stocks that had already undergone deep corrections, such as Zhongji Innolight Co., Ltd., GigaDevice Semiconductor Inc., Shenzhen Baiwei Storage Technology Co., Ltd., Bestechnic (Shanghai) Co., Ltd., and Shanghai Bright Power Semiconductor Co., Ltd., also successively announced buyback plans or accelerated buyback progress based on confidence in the company's future development prospects and recognition of long-term value.
It is evident that during periods of severe market adjustments and fragile investor confidence, listed companies have used "real money" buyback operations to support their own stocks, conveying through concrete actions their recognition of their own value and confidence in future development.
Yang Changlong, a senior investment advisor at Shaanxi Jufeng Investment Information Co., Ltd., said in an interview that in a complex environment of intensified market volatility and cautious investor sentiment, leading companies intensively advancing share buybacks helps further form a demonstration effect, encouraging more listed companies to stabilize stock prices and optimize capital structures through buybacks, while also helping to gradually repair investor expectations and boost market confidence.
New Buyback Plans Increase During the Year
Meanwhile, newly added buyback plans have increased significantly and been implemented intensively. According to Tonghuashun data, from the beginning of this year through October 11, A-share listed companies have announced a total of 607 buyback plans, an increase of approximately 26.46% compared to 480 buyback plans in the same period last year.
In terms of implementation progress, 227 of the 607 buyback plans have been completed, accounting for 37.4%.
Regarding the purposes of share buybacks by listed companies, they are typically used for employee stock ownership, equity incentives, cancellation, market value management, or convertible bonds. In practice, the largest number are used for employee stock ownership or equity incentive plans. Of the 607 buyback plans, 368 are for equity incentives or employee stock ownership plans, accounting for approximately 60.63%. The second-largest category is buyback cancellation; among the 607 plans, 70 are for cancellation to reduce registered capital, accounting for approximately 11.53% of all buyback plans.
In Li Xiao's view, buybacks used for cancellation reduce outstanding shares, which can enhance earnings per share and net assets per share. This move further conveys management's optimism about the company's long-term development to the market and helps strengthen the confidence of the company's shareholders.
"Buybacks used for equity incentives involve shares that will re-enter circulation later, creating potential selling pressure. In contrast, cancellation-based buybacks permanently reduce total share capital with no subsequent reduction pressure, making them a more direct way to reward all shareholders and providing stronger support for the company's stock fundamentals," said Yang Changlong.
In recent years, the rise of cancellation-based buybacks has been inseparable from regulatory guidance. From the "Opinions on Strengthening Supervision of Listed Companies (Trial)" which proposed that "where listed companies use cash as consideration to repurchase shares through tender offers or centralized bidding and cancel them, the repurchase and cancellation amount shall be included in the dividend payout ratio calculation" and "promote quality listed companies to actively carry out share buybacks, guide more companies to repurchase and cancel shares, and enhance the market stabilization effect"; to the new "Nine National Articles" (i.e., the "State Council Opinions on Strengthening Supervision and Preventing Risks to Promote High-Quality Development of the Capital Market") which further clarified guiding listed companies to cancel shares after buybacks in accordance with the law; and then to the "Guidelines for Supervision of Listed Companies No. 10 — Market Value Management" which encourages listed companies to cancel repurchased shares in accordance with the law — Li Xiao believes that regulatory guidance is the main reason for the notable rise in cancellation-based buybacks. Additionally, under specific valuation environments, cancellation-based buybacks offer tax deferral effects and, compared to cash dividends, can balance both "dividend attributes" and "stock price catalyst attributes."
Yang Changlong expects that the proportion of cancellation-based buybacks will continue to increase in the future.
Moreover, from the perspective of enterprise nature, an increasing number of state-controlled listed companies have regarded buybacks as an important means of market value management this year. Tonghuashun data shows that among the 607 buyback plans, state-controlled listed companies (including central SOE state-controlled, provincial SOE state-controlled, municipal SOE state-controlled, and other state-owned) have announced a total of 61 buyback plans, with proposed buyback amounts ranging from 23.747 billion yuan to 37.884 billion yuan.
"Overall, the advantage of private enterprises in the number of share buybacks and the relative volume advantage of state-controlled listed companies in buyback amounts complement each other, jointly building the current A-share buyback ecosystem oriented toward 'improving shareholder returns and stabilizing market expectations,'" said Li Xiao.
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