Time right for share buybacks despite economic downturn

THE world’s largest glove maker, Top Glove Corp Bhd, has repurchased an astounding RM843.9 million of its shares so far this year.

To put things into perspective, that amount is 5.6 times the investment made by property developer Mah Sing Group Bhd to build a rubber glove factory with an annual capacity of 3.68 billion pieces of gloves.

It is not a secret that a number of companies listed on Bursa Malaysia have been engaging in share buybacks quite aggressively this year. Apart from Top Glove, the more notable ones are two other glovemakers, Supermax Corp Bhd and Rubberex Corp (M) Bhd, and Berjaya Corp Bhd.

Although the total number of shares bought back by companies this year does not differ much from that of last year, the buybacks have attracted more attention for several reasons. First, given the dire state of the economy, the thinking is that companies should be conserving their cash. Second, it is probably because the glovemakers have been actively doing so.

For example, Top Glove did not engage in share buybacks at all last year while Supermax only purchased slightly more than 11 million shares in 2019. This year, Top Glove acquired 103.4 million shares or 1.28% of its total share base, while Supermax repurchased 42.9 million shares or 2.75% of the total issued shares.