CICC: How to View the New Landscape of A-Share Buybacks?

CICC released a research report stating that the fundamentals of some leading companies in growth sectors remain resilient, and listed companies are demonstrating confidence in their own value and long-term development prospects through share buybacks, increased holdings, and dividends. The interim reports gradually disclosed in August are expected to provide fundamental support for the market. Compared to major overseas markets, the overall valuation of A-shares remains attractive. The continued inflow of medium- and long-term funds will also help enhance the market's inherent stability. CICC's main points are as follows: Recently, A-share listed companies have been intensively conducting share buybacks and increasing shareholdings, with significant buyback projects occurring. Since the second half of the year, the A-share market has shown a clear phase adjustment due to both internal and external factors, with a decline in market risk appetite and trading volume. The technology sector, which had seen significant gains and busy trading previously, has especially experienced notable corrections. Against this backdrop, numerous listed companies have announced buyback plans intensively since July and have accelerated the implementation of existing plans, conveying confidence in their company value and long-term development, and stabilizing market expectations. The number and scale of buyback plans in July saw a significant increase. According to Wind statistics, A-share listed companies announced a total of 266 buyback plans in July, with a proposed buyback amount of approximately 90 billion yuan; in the same period in 2025, there were 150 plans with an amount of 16.5 billion yuan, representing year-on-year increases of 76% and 444% respectively. From January to July 2026, the actual buyback amount for A-shares totaled 86.6 billion yuan, of which the actual buyback in July alone reached 21.7 billion yuan, a year-on-year increase of 46% and a month-on-month increase of 33%. In terms of industry distribution, the buyback scales in the new energy, consumer, and technology sectors are noteworthy. Since the beginning of 2026, among companies that have disclosed buyback progress, the power equipment, household appliances, electronics, pharmaceutical biology, and food and beverage sectors have ranked high in buyback amounts, accounting for 19%, 13%, 11%, 9%, and 7% respectively. In July, some leading companies in the new energy and technology sectors that had previously experienced substantial fluctuations launched large-scale buyback plans, such as Contemporary Amperex Technology planning to repurchase 20-40 billion yuan of shares to retire and reduce the company's registered capital, making it the largest buyback project in A-share history; GigaDevice Semiconductor Inc. plans to buy back 1-2 billion yuan of shares and retire all; Zhongji Innolight plans to buy back 4-8 billion yuan; Foxconn Industrial Internet plans to buy back 1-2 billion yuan. At the same time, multiple companies also successively disclosed shareholder increase plans and mid-term dividend proposals. The coordinated progression of increases, buybacks, and dividends reflects companies confidence in their own value and long-term development prospects, it also helps to stabilize market expectations and improve investor sentiment while providing returns to shareholders through actual investments. Most buyback plans set the upper price limit significantly higher than current stock prices, indicating considerable room for valuation recovery. As of July 31, among the newly disclosed buyback plans in July, approximately 85% of companies set their buyback price limits above the current stock prices, with a median premium rate of about 34% compared to the current price; of these, 79% of companies have a premium exceeding 20%, and 12% exceeds 50%. The higher upper price limits for buybacks reflect the company's recognition of its long-term value and can provide a certain reference for the market to assess its reasonable value range. The increasing number of retirements through buybacks also enhances the shareholder return characteristics. Among the newly disclosed buyback plans in July, several companies explicitly stated that the repurchased shares would be used for retirement and capital reduction. For instance, Foshan Haitian Flavouring and Food plans to retire 70% of the repurchased shares, and Contemporary Amperex Technology and Guangxi Liugong Machinery also clearly stated their plans to retire all repurchased shares and reduce the registered capital accordingly. Meanwhile, companies such as Xingfa Group, Midea Group Co., Ltd, Jinko Solar, and Macmic Science & Technology have changed their original plans to use repurchased shares for maintaining company value and shareholder equity or implementing equity incentives to retire shares instead. Compared to being temporarily held as treasury stock or used for equity incentives, retired buybacks permanently reduce the total share capital, which can enhance earnings per share without changing profits and further assist in enhancing shareholder returns. The continuous improvement of the buyback system and financing tools is also an important support for the current surge in buybacks. The exploration of A-share buyback systems began in 1993, and has undergone several significant reforms in 2005, 2018, 2022, and 2023. On September 24, 2024, the China Securities Regulatory Commission publicly solicited opinions on the "Guidance on Regulatory No. 10 for Listed Companies Market Value Management (Draft for Comment)." On the same day, the central bank announced the establishment of a stock repurchase increase loan tool to guide financial institutions to provide loans to eligible listed companies and major shareholders, promoting listed companies to actively use buybacks and shareholder increases among other tools for market value management. In January 2025, the policies were further optimized, reducing the self-owned funds ratio requirement from 30% to 10% and extending the loan term from 1 year to 3 years. The central bank's latest report shows that as of March 31, 2026, financial institutions signed stock repurchase increase loan contracts amounting to approximately 370 billion yuan, with over 180 billion yuan already disbursed. Since July, several companies have concurrently disclosed special loan arrangements in their buyback plans. For example, Olympic Circuit Technology plans to use 200-300 million yuan to repurchase shares and has obtained a loan commitment letter of 270 million yuan from China Construction Bank; Ongoal Technology also received a loan commitment letter for stock repurchase from CITIC BANK. The normalization of repurchase increase loans helps alleviate the funding constraints on company buybacks, encouraging companies to actively engage in market value management, thereby supporting the healthy operation of the capital market. The proportion of market value management in buyback purposes has increased. Since the implementation of new regulations on market value management at the end of 2024, the scale proportion of market value management-related buybacks has significantly increased. From 2026 onwards, the percentage of buyback projects and amounts under market value management categories has been 17.2% and 44.2%, respectively, showing growth from 16.7% and 42% in 2025. This change indicates that A-shares are gradually shifting from being primarily tools for equity incentives to a significant method for stabilizing investor expectations, enhancing company investment value, and increasing shareholder returns. Previous research has shown that compared to other buyback purposes, market value management buybacks achieve higher short-term and medium-to-long-term excess returns. From the perspective of enterprise nature, private enterprises remain the mainstay of A-share buybacks, while the participation of local state-owned enterprises has significantly increased in recent years. Since 2017, the scale of buybacks by private enterprises has consistently exceeded 50%; the proportion of buybacks by local state-owned enterprises rose from 8% in 2024 to 16% and 15% in 2025 and early 2026, respectively. The A-share buyback market is gradually forming a pattern where leading private enterprises and local state-owned enterprises push forward together. From a market perspective, the A-share market is currently still at a relative low point this year, with a recovery in progress. The factors triggering this adjustment are mostly short-term, phase-specific, and have been sufficiently digested. After the eventful "super week" (July 27 to 31), external uncertainties have eased marginally: the Federal Reserve maintained interest rates during the July FOMC meeting; although the statement had hawkish tones, it did not tighten monetary policy further. The South Korean government's response to leverage risks has intensified, and the deleveraging process is advancing rapidly; global technology leaders are gradually disclosing their earnings reports, and although there is still some disagreement regarding the lower returns on high capital expenditures, the demand for AI computing power and the prosperity of the industrial chain have not shown a trend reversal; on August 1, Trump announced that he agreed to cancel strikes against Iran, easing tensions between the US and Iran once again. Internally, the previously high trading congestion in the technology sector has clearly rebounded, and panic sentiment and selling pressure have eased. Meanwhile, positive factors are accumulating. Currently, some leading companies in growth sectors still show resilient fundamentals, and listed companies are conveying their confidence in their own value and long-term development prospects through buybacks, increased holdings, and dividends; the interim reports gradually disclosed in August are expected to provide fundamental support for the market; compared to major overseas markets, the overall valuation of A-shares remains attractive; the continued inflow of medium- and long-term funds will also help enhance the market's inherent stability. From a mid-term perspective, we maintain a strong bullish outlook on the A-share market continuing its upward trend since September 24. The resonance of international order restructuring and our countrys industrial innovation trends is the core driver behind the current market rise and the revaluation of Chinese assets; as these two conditions remain intact, they will continue to support the performance of Chinese assets. In terms of allocation, companies that have recently announced buybacks are likely to show better relative performance, and with the improvement in investor sentiment, stock prices have room for recovery. Chart 1: A-share Buyback Completion Amount Source: Wind, CICC Research Department Chart 2: Increase in the Proportion of Market Value Management Buybacks Source: Wind, CICC Research Department Chart 3: Significant Scale of Buybacks in New Economy Sectors and Consumer Sector Source: Wind, CICC Research Department Chart 4: Increased Enthusiasm for Buybacks by Local State-Owned Enterprises Since 2025 Source: Wind, CICC Research Department Chart 5: The Shanghai Composite Index Closed in the Red This Week Note: Data as of July 31, 2026 Source: Wind, CICC Research Department Chart 6: The STAR 50 has the Highest Increase Since Early 2026 Note: Data as of July 31, 2026 Source: Wind, CICC Research Department Chart 7: The Media Industry Led Gains This Week, While the Previously High-Gaining Communication and Electronics Sectors Corrected Significantly Note: Data as of July 31, 2026 Source: Wind, CICC Research Department Chart 8: The Electronics Sector has the Largest Increase Since Early 2026 Note: Data as of July 31, 2026 Source: Wind, CICC Research Department