21 March Chinese Alibaba announced, that the management allowed to increase the amount of buyback from 15 up to 25 billion dollars. "As a sign of confidence in the future growth of the company", Alibaba explained in a press release.. The papers will be redeemed within two years., until March 2024.
For comparison
In 2021, companies from S&P 500 repurchased shares for a record $ 882 billion. If we take the capitalization of the index of 40 trillion dollars, then the buyback was 2-2.5% per annum of the market value.
Alibaba said, that earlier in the framework of the current program repurchased shares for $ 9 billion. That is, from 25 16 billion left. This means, that 8 billion a year can be sent to the buyback for two years. Taking into account the capitalization of Alibaba in 260 billion, the buyback will be about 3% per annum of the market value.
That's a bit more than the S average.&P 500, but it is unlikely that such a volume will lead to a significant increase in securities.. For example, from April to December 2021, Alibaba under the current program sent about $ 8 billion to buy back. And that didn't stop its shares from falling in those nine months. 60%.
What about stocks
All this time, Alibaba shares fell for various reasons.. For example, in the fourth quarter of 2021, the company's sales grew by only 10% – minimum in the last eight years.
See also, as well as other Chinese giants, pressured by local regulators: issued antitrust fines and restricted work. And recently they were joined by American colleagues.. The US Securities and Exchange Commission – SEC – obliged Chinese issuers to disclose their accounting statements in detail.
Together, these and other factors led to, what is the index of the Hong Kong stock exchange Hang Seng 15 March fell to the level of 2016. To stop the fall, the Chinese authorities even had to reassure investors. They promised to ease regulatory pressure and support companies with listings on foreign sites..
Despite the protracted fall in Alibaba shares, new buyback program is good news. for at least two reasons. First: manual shows, that believes in the growth of shares in the future. Second: management may know more, than an ordinary investor. Possible, that the company's management has received any guarantees from local authorities to ease regulation.
22 In March, Alibaba shares in Hong Kong rose by 11%.
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