By Jane Han
Staff Reporter
In times of risks and uncertainty, companies are quick to hold press conferences to send out the we're-in-good-shape message. But corporate executives are finding actions sure do speak louder than words when it comes to protecting stock value.
Take Kolon Engineering & Construction, for example. The builder was one of the hardest hit firms by recent overblown rumors circling liquidity concerns. It fended off market jitters via press releases, but Kolon's share price continued to freefall down to its 52-week-lowest of 6,410 won in early September.
But once news surfaced a few days later that its CEO Kim Jong-geun spent 300 million won ($270,000) to acquire Kolon E&C's shares, stock values made a rare turnaround, now trading at the 7,500-won level.
The builder still has some way to go before fully reviving its rosier days, but analysts say that the CEO's move could be seen as a bold statement of confidence in the company's prospects amid the construction industry's slowdown.
Kim isn't alone in the latest share repurchase spree spreading among local CEOs.
SK Energy Vice Chairman & CEO Shin Heon-cheol so far this year raked in 2,500 shares of the oil refiner, while SK Holdings President Park Yeong-ho newly bought 1,600 shares, all part of their efforts to boost the company's share price they see as undervalued.
For the same reason, Hanjin Shipping CEO Park Jung-won this month acquired 5,230 shares of the country's largest container carrier. After falling to a 52-week-low of 21,200 in late August, Hanjin's stock value took an upward turn coinciding with Park's purchase.
Most recently, Kim Jung-tae, CEO of Hana Financial Group's banking unit, spent 100 million won Monday to buy up 4,000 shares, to brush off risk concerns of the country's third-largest bank.
Shares in Hana Financial Group had been falling for five straight days over rumors that the company may suffer heavy losses due to currency options agreements with a money-squeezed domestic tech company.
However, Monday's close shows that perhaps Kim's bet did the magic, as the bank's shares rallied 2 percent to 30,000 won.
Market experts say that stock repurchases by a company's top executive is one of the most surefire ways to deliver the message of long-term confidence.
``Seeing corporate management buy their own stocks sends positive signals to investors, especially during times of market instability,'' says Joo Sang-chul, an analyst of Kyobo Securities.
He said, however, that investors should keep wary of certain instances when shares are bought with alternative intentions even when the company's liquidity is not enough.
Lee Gyu-sun, an analyst at Daewoo Securities, added that purchasing own stocks helps prevent investors' losses, blocks a further drop in share value and provides momentum for a steep rise.
``It could be a quick solution to putting market rumors to rest,'' he said.
Dong-A pharmaceuticals, Kumho Industrial, Daewoo International, Asiana AIrlines and Keangnam Enterprises were among other companies, in which top executives acquired shares.
While many CEOs turn to share repurchases to shield their firms from market jitters, others use the opportunity to solidify their ownership.
Shinsegae Group Chairwoman Lee Myung-hee bought up 56,500 shares over an eight-day period in July for 28 billion won, according to the nation's powerhouse retailer. She upped her stake to 16.48 percent from 16.18 percent.
And the timing was perfect for Lee, the country's richest woman, as Shinsegae's share price had dipped to the 470,000 won level in mid-July, just before it bounced back to the mid-500,000 won range.