Last week, tech giant Alibaba made an interesting announcement. The company decided to increase its share buyback program from $15 billion to $25 billion.
The share buyback program will be effective for a two-year period through March 24, Alibaba said.
The tech giant bought back about 56.2 million American depositary shares (ADRs), worth about $9.2 billion, under the previously announced buyback program. American depositary shares are listed in the U.S. and act as proxies for foreign companies.
Alibaba is looking to boost investor confidence. The Hangzhou-headquartered company faced several issues including macroeconomic headwinds and continued regulatory tightening from the country’s government that led authorities to slap Alibaba with a $2.8 billion antitrust fine in 2021.
Alibaba and other companies
Apart from Alibaba, phone maker Xiaomi also made an interesting decision. On Tuesday, the company announced a buyback of up to 10 billion Hong Kong dollars ($1.28 billion). Moreover, J.D. Health, J.D.’s online healthcare arm, said it would buy back shares of up to 3 billion Hong Kong dollars.
Asia has seen a wave of stock buyouts, and bank analysts say it is not stopping anytime soon. Apart from Alibaba and other Chinese tech giants, foreign companies also announced buyouts. For instance, HSBC, insurance giant AIA, and Toyota also announced stock buybacks in the past few weeks.
Morgan Stanley and Goldman Sachs screened stocks likely to carry out stock buybacks. Morgan Stanley selected stocks that are best placed to carry out buybacks based on a list of criteria: balance sheet strength to support buybacks, “heavily discounted” company valuation, etc.
The bank picked Alibaba, Xiaomi, Budweiser, and others.
As stated above, Goldman Sachs also selected stocks. In a March 25 note, Goldman Sachs said it focused on companies with track records of share buyback announcements. Let’s have a look at several Japanese stocks picked by the bank. Goldman Sachs’s list of the top 10 Japanese stocks is impressive, sorted by market capitalization. The first spot belongs to KDDI, followed by Fujitsu, Dai-ichi Life, and others.
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