Hard tech leads a new wave of share buybacks; after previous periods of intensive buybacks, how has the A-share market performed?

Hard tech companies are becoming the most closely watched force in the new wave of share buybacks. Entering October 2026, leaders in sectors such as semiconductors, AI computing power, and PCBs have successively proposed buybacks. The characteristics of this round of buybacks, in addition to the large amounts, also include who proposed the plans. Controlling shareholders and actual controllers of companies such as Eoptolink Technology Inc. and Suzhou TFC Optical Communication directly proposed them, while chairmen of companies such as Hygon Information Technology have also successively acted. The industry distribution is concentrated in hard tech fields that have attracted attention due to recent adjustments. Some companies plan to cancel the shares, while others will use them for employee stock ownership or equity incentives. Although all are buybacks, the arrangements are not the same. New buyback plans by hard tech companies concentrated in October, and the actions of industrial capital have once again raised a question of market concern: after a wave of buybacks, how will the A-share market perform? The reporter reviewed time points with complete observation periods and found that historically there have been both clear recoveries and continued short-term adjustments, with the pace of rebounds not consistent. From the experience of previous buyback waves since 2018, generally during market downturns, intensive buybacks by listed companies have played a positive role in boosting market confidence and gradually improving market conditions. After several buyback waves, the market showed clear rebound recoveries. Even if the market did not recover immediately after some buyback waves, it can be seen that in most cases the market also stabilized. Autumn 2018 and 2022: Clear rebounds 2018 was an important turning point for the share buyback system. On October 26, the relevant provisions on share buybacks in the Company Law completed special amendments, adding circumstances under which buybacks are allowed and simplifying decision-making procedures; on November 9, the CSRC, the Ministry of Finance, and SASAC jointly issued opinions supporting share buybacks by listed companies. Institutional improvements and stronger corporate willingness to buy back formed the background for the subsequent pickup in buybacks. But policy changes did not immediately turn the indices around. Using the end of October 2018 as the baseline, in the following month the Shanghai Composite Index fell 0.56% and the CSI 300 rose 0.60%; by the end of January 2019, the former was still down 0.70% and the latter was up 1.52%. During this period, the closing levels of both indices at the end of December 2018 were lower than at the end of October. Only when the window was extended to six months did the results become clearly different. As of the end of April 2019, the Shanghai Composite Index had risen 18.27% from the end of October 2018, and the CSI 300 had risen 24.08%. This stage supports the judgment that "a recovery may follow an active buyback period," but it cannot lead to the conclusion that "one can immediately buy at the low point upon seeing a buyback announcement." In mid-to-late October 2022, listed companies intensively proposed buybacks, and the market subsequently recovered faster. Using the end of October that year as the baseline, the Shanghai Composite Index rose 8.91%, 12.52%, and 14.85% over the following one, three, and six months, respectively; the CSI 300 rose 9.81%, 18.47%, and 14.83%, respectively. 2021 to 2023: After buybacks, the market may still fluctuate In the buyback wave after the 2021 Spring Festival, leaders in industries such as home appliances were important participants. Midea Group Co., Ltd proposed a buyback arrangement of up to RMB 14 billion in February of that year and disclosed completion of implementation in April, with actual spending of about RMB 8.664 billion. Starting from the end of March 2021, over the following three months, the Shanghai Composite Index rose 4.34% and the CSI 300 rose 3.48%; extended to six months, the Shanghai Composite Index was still up 3.67%, while the CSI 300 turned to a decline of 3.60%. The path in spring 2022 was more tortuous. In March of that year, listed companies successively disclosed buyback plans and progress announcements. Using the end of March as the baseline, by the end of April the Shanghai Composite Index and CSI 300 had fallen 6.31% and 4.89%, respectively; by the end of June they had turned to gains of 4.50% and 6.21%; by the end of September they had fallen again by 7.00% and 9.89%, respectively. The buyback wave in August 2023 also did not immediately end the market adjustment. At that time, policy signals supporting share buybacks were released, and many companies disclosed shareholder proposals or board plans. But from the end of August to the end of November, the Shanghai Composite Index fell 2.89% and the CSI 300 fell 7.15%; by the end of February 2024, they were still down 3.36% and 6.62%, respectively. December 2024: Leaders' cancellation-type buybacks concentrated The characteristic of the buyback wave at the end of 2024 was the advancement of large buyback plans and the rise of cancellation-type buybacks. After the stock buyback and increase re-lending facility was implemented in October, funding channels were further broadened; in December, cancellation-type buybacks by leaders such as Hangzhou Hikvision Digital Technology and Kweichow Moutai made important progress. Using the end of December 2024 as the baseline, in the following month the Shanghai Composite Index and CSI 300 fell 3.02% and 2.99%, respectively; after three months they fell 0.48% and 1.21%, respectively; after six months they rose 2.76% and 0.03%, respectively. Leader buybacks and improvements in shareholder return mechanisms did not immediately set the indices on a sustained upward trend. But it is worth noting that the Shanghai Composite Index still accumulated a gain of 2.76% over the subsequent six months. After the stock market fell rapidly from a high level on October 8, 2024, this round of buybacks did play a role in stabilizing market confidence. April 2025: Clear market recovery The buyback wave in April 2025 occurred when tariff shocks triggered a rapid market adjustment. Corporate buybacks and increases in holdings by important shareholders concentrated in a short period, and industrial capital's intention to stabilize expectations was clear. According to statistics, from April 7 to 18:00 on April 15, 154 A-share companies disclosed buyback plans or proposals by chairmen or shareholders, with a proposed buyback cap of RMB 58.223 billion; another 98 companies had important shareholders launch increase plans, with an upper limit of RMB 42.330 billion, totaling RMB 100.553 billion. The concentrated response within nine calendar days reflected the speed of the market-support actions at that time. Using the end of April 2025 as the baseline, in the following month the Shanghai Composite Index and CSI 300 rose 2.09% and 1.85%, respectively; after three months the gains widened to 8.97% and 8.09%; after six months they rose 20.61% and 23.08%, respectively. After this concentrated emergence of buybacks and increases, the market did indeed recover clearly. Buybacks help boost market confidence From the experience of previous buyback waves since 2018, generally during market downturns, intensive buybacks by listed companies have played a positive role in boosting market confidence and gradually improving market conditions. After the buyback waves in October 2018, October 2022, and April 2025, the market showed clear rebound recoveries. Even if the market did not recover immediately after some buyback waves, it can be seen that in most cases the market also stabilized. Related research by Founder also shows that undervalued companies have obvious excess returns after buyback plans are announced; the ratio of a company's buyback amount to total market value is positively correlated with excess returns; and corporate buybacks have a long-term supporting effect on stock prices. Related research by Huafu Securities also shows that the trends of most industry indices benefit from increased buyback activity. Hard tech leads, October proposals concentrated This buyback wave since October differs significantly from previous ones. This time, hard tech STAR Market companies in semiconductors, computing power, high-end equipment, and other fields have become the core main force. The concentrated disclosure window was from October 15 to 19, with CXMT Corporation, Hygon Information Technology, Dawning Information Industry, Montage Technology, Hwatsing Technology, Unicomp Technology, and others successively putting forward buyback proposals, while leaders in optical modules, memory chips, and other sectors followed suit, creating a situation of collective action by the tech sector. In terms of background, this round comes at a stage of continued market volatility, valuation corrections in the tech sector, and the approaching third-quarter report disclosure window, as industrial capital concentrated on releasing confidence in long-term fundamentals. Most plans were directly proposed by chairmen or actual controllers and are indicative preliminary plans, with stronger signaling significance. Most buyback funds come from own funds, with sizes concentrated in the range of tens of millions to RMB 2 billion, and leading names having higher single-transaction caps. This round of tech company buybacks shows several characteristics. First, the uses are differentiated. Most STAR Market tech companies will prioritize repurchased shares for equity incentives and employee stock ownership to bind core R&D personnel; some plans include fallback clauses under which, if incentives cannot be implemented within the period, the shares will be converted to cancellation and capital reduction, while a few targets directly specify that all repurchased shares will be used for cancellation, balancing talent incentives and shareholder returns. Second, they are concentrated in hard tech sectors with high R&D and relatively stable cash flow, mainly storage, CPU, servers, semiconductor equipment, chip interfaces, and industrial inspection equipment. Most are STAR Market-listed companies, which is clearly different from past buybacks that were mostly concentrated in traditional manufacturing and consumer leaders. Third, the disclosure rhythm was "batch overnight announcements," with many companies simultaneously releasing chairman buyback proposals in the evening, creating a sector resonance effect and rapidly raising market attention. Compared with several previous buyback waves in A-shares, the two classic buyback waves in 2015 and 2018 were mostly passive rescue-type buybacks after sharp market declines and outbreaks of equity pledge risks. The core goal was to support stock prices and prevent risks. After buybacks, shares were mostly used for equity incentives, with a very low cancellation proportion, and the market generally worried about future selling pressure from treasury shares. Although this round of buybacks was also launched in a volatile market environment, industrial capital is more proactive and no longer simply "supporting the market in an emergency." Instead, it treats buybacks as a regular tool: on the one hand, using equity incentives to retain scarce R&D talent in the chip and computing power industries; on the other hand, some plans directly implement cancellations, permanently reducing share capital and enhancing EPS. In addition, in historical buyback waves, tech companies were not the main players; traditional blue chips and cyclical companies were the main force. But in this round, hard tech and STAR Market companies have come to the fore, reflecting industrial capital's long-term confidence in hard tech such as domestic computing power and semiconductor self-sufficiency. This article is reprinted from "Cailian Press," edited by GMTEight: Feng Qiuyi.