09.25.2001
Buybacks supporting market

• Since Saturday, 12 companies have announced NT$33bn in share buybacks. Among the larger companies announcing buybacks are Fubon Insurance, Far Eastern Textile, Taiwan Mask, Capital Securities and Asia Cement.

• It looks like Sept. buyback activity will be lower than in August when 27 companies announced an intention to repurchase NT$154bn of shares. However, unlike the August purchases, which were largely used for employee compensation, the reason most often cited for the latest purchases is to protect shareholders, i.e. to support the share price.

• The current slump in the Taiwan and global markets is comparable to the market crash on Black Monday in 1987, the market slump following Iraq’s invasion of Kuwait in 1990, and the sell-off in Asian markets during the Asian crisis of 1997 and 1998. The markets recovered from these events, rewarding investors willing to Buy with a longer term view. A slightly different catalyst this time around, but we expect the same investment consequences.