Friday, August 23, 2019
Executives Buy Treasury Shares amid Stock Market Crash
To Defend Falling Stock Prices
Executives Buy Treasury Shares amid Stock Market Crash
  • By Yoon Young-sil
  • August 9, 2019, 11:27
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An increasing number of corporate executives are buying treasury shares to help defend their company shares.

An increasing number of corporate executives are buying treasury shares to help defend their company shares as a host of stocks hits new yearly lows amid a bearish run in the Korean market.

Kumyang Co. CEO Ryu Gwang-jy announced that he bought back 76,153 company shares over the last three days, according to the nation's sole bourse operator Korea Exchange (KRX) on Aug. 8. It is also reported that Bae Jae-hoon, head of Hyundai Merchant Marine Co., purchased 2,354 treasury shares a day ago and Won Jong-gyu, president of Korean Reinsurance Co., bought 29,000 shares of the company on Aug. 5.

The three companies have one thing in common – a sharp decline in share prices. Hyundai Merchant Marine saw its share price decrease 12.8 percent from 3,305 won (US$2.73) on July 31 to 2,880 won (US$2.38) on Aug. 5, but the figure recently rose above 3,000 won (US$2.48) again. The price of Korean Reinsurance shares, which continued to reach a record low, also dropped to 7,390 won (US$6.12) on Aug. 7, but rebounded to 7,630 won (US$6.31) on Aug. 8.

In particular, biotech companies which are suffering from weak investors’ sentiment are active in buying back company shares. Moon Eun-sang, CEO of SillaJen Inc., purchased 229,000 company shares worth 3.60 billion won (US$2.98 million) from Aug. 6 to 7 as its stock price recorded the lower limit for three days in a row owing to its decision to halt the global phase-3 clinical trial for Pexa-Vec, an oncolytic viral drug for liver cancer. The CEO’s stock purchase helped boost the company’s stock price 3.17 percent on Aug. 8, the first rebound in five trading days.

Jung Hyun-ho, CEO of MedyTox Inc., which had a 39.2 percent decline in share prices this year due to controversy over botulinum toxin (BTX) strain, bought back more than 3,600 company shares over eight times this year alone. In addition, heads of major bio firms, such as LegoChem Biosciences Inc., Samil Pharmaceutical Co., Peptron Inc., Genexine Co. and Genomictree Inc., have announced to purchase their treasury shares from last month.