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Insiders buying reported as stocks fall through the floor

Mar 25,2020
Executives and employees of large corporations are buying up shares in their own companies in an attempt to shore up stock prices, which have collapsed as a result of the coronavirus outbreak.

Some companies themselves are also in the market for their shares, engaging in aggressive buybacks at a time when they deem prices to be too low.

Hyundai Motor Executive Vice Chairman Euisun Chung bought 27.9 billion won ($22.2 million) worth of Hyundai Motor and Hyundai Mobis on Monday and Tuesday, according to stock exchange filings.

The 204,464 shares in Hyundai Motor pushed up Chung’s holding by 0.05 percentage points, from 1.81 percent to 1.88 percent. He bought 0.11 percent of the stocks of Hyundai Mobis. Chung previously owned none.

The move came after the share prices of Hyundai Motor and Hyundai Mobis nearly halved compared to the beginning of this year, impacted by the fears of the coronavirus pandemic.

Shares of Hyundai Motor rose 8.56 percent to 74,800 won on Tuesday. The Kospi rose 8.60 percent.

If a company buys its own shares, the price can rise due to the reduction of the total shares outstanding if the purchased shares are canceled. When an executive buys shares, the price can also rise, as it indicates demand for the stock and suggests that insiders are optimistic about the prospects for the company.

The last time Euisun Chung made a significant purchase of Hyundai Motor was in 2015, when he bought 3.16 million shares of the company for around 500 billion won.

At Posco, 51 executives including CEO Choi Jeong-woo bought 16,000 shares in Posco - worth 2.6 billion won - from March 20 to 23. The shares started the year at 236,000 won and were trading at 138,000 won on Monday.

The announcement of insider buying lifted the shares 5.43 percent to 145,500 won on Tuesday.

The decision is intended to project confidence in the stock after a steep drop in the price. Posco says that the shares are undervalued as a result of the global rout in stocks and that it will endeavor to turn the situation around.

Hankook Tire bought 50 billion won of its own stocks in a buyback, the company announced in a disclosure Monday. It said it was seeking to restore the value of its shares.

Hankook Tire rose 9.29 percent to close at 17,050 won on Tuesday.

Jeon Young-muk, CEO of Samsung Life Insurance, bought up 6,000 shares of the insurer on Tuesday, investing 200 million won.

The company explained that the move is an element of “responsible management” being practiced in the economic downturn. The stock went on to gain 5.62 percent.

The board of Daewoong Pharmaceutical passed a motion to buy back 44 million of its own shares for nearly 30 billion won on Monday.

Dong-A Socio Holdings bought back 140,000 million shares last week for 9.7 billion won, while the CEO of Medytox bought 18,300 shares Monday and Tuesday.

Com2uS, a gaming publisher, will buy back 15 billion won worth of its own stocks over the course of this year, while Mgame will purchase 2 billion won worth of shares.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]


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