As foreign selling pressures shake the domestic stock market, companies have initiated a "share buyback defense." A total of 96 listed companies, including Samsung Electronics and SK Hynix, have applied to repurchase over 4.69 million shares to support their stock prices.
According to the Korea Exchange on September 29, a total of 96 listed companies submitted applications for the sale of 4,693,760 shares of their own stock on that day.
In the main stock market, 43 companies applied to buy back a total of 3,708,063 shares. Among these, 18 companies opted for direct acquisition, while 25 companies chose to acquire shares through trust contracts.
Samsung Electronics submitted the largest application with 2 million shares, followed by SK Hynix with 600,000 shares. Hyundai GF Holdings applied for 180,000 shares, and Shinhan Financial Group requested 130,000 shares. KB Financial sought to buy back 80,000 shares, while Daehan Flour Mills and Woori Financial Group each applied for 70,000 shares.
In the KOSDAQ market, 53 companies applied to repurchase a total of 985,697 shares. Of these, 10 companies applied for direct acquisition of 318,020 shares, while 43 companies opted for the trust method, totaling 667,677 shares.
Among the direct acquisitions, Exem led with 93,000 shares, while Samil and Punggang each applied for 50,000 shares. In the trust method, Digital Daesung had the largest application with 100,000 shares, followed by NPK and Estraffic with 50,000 shares each, and Lindeman Asia with 40,000 shares.
The surge in share buyback applications from listed companies is attributed to the recent increase in volatility in the domestic stock market. The KOSPI index dropped more than 2% the previous day, falling below the 7,000 mark, and continued to experience significant foreign selling on this day.
On this day, the KOSPI closed at 6,870.81, down 18.93 points (0.27%) from the previous trading day. Foreign investors sold a net 2.903 trillion won in the main stock market, contributing to the decline. In contrast, individual and institutional investors bought a net 1.1432 trillion won and 121.1 billion won, respectively.
The stock price movements of Samsung Electronics and SK Hynix, which have large buyback volumes, diverged. Samsung Electronics rose 0.93% from the previous trading day, rebounding after a sharp drop, while SK Hynix closed down 0.17%.
Not all companies that applied for share buybacks experienced uniform stock price support. Shinhan Financial Group, which applied to buy back 130,000 shares, closed down 1.62% at 109,500 won. Woori Financial Group also fell by 1.37%.
Share buybacks are seen as a supply factor that absorbs selling pressure during market downturns, as companies directly purchase their own shares. Analysts suggest that in situations of intensified foreign selling, corporate buybacks can help cushion stock price declines.
However, not all applications for share buybacks result in actual purchases. The application process involves notifying the Korea Exchange of the intention to place buy orders in the market on the specified trading day, based on previously disclosed acquisition plans. The actual number of shares purchased may differ from the application amount due to intraday price movements and market conditions.
Market analysts believe that the defensive effect of share buybacks may be more pronounced during market downturns. Lee Jeong-bin, a researcher at Shinhan Investment Corp., noted in a recent report that share buybacks in non-financial sectors have shown relatively high performance and low downside beta during market declines, emphasizing that buybacks are more defensive in nature during downturns than they are for generating alpha in rising markets.
* This article has been translated by AI.
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