Instead, DeltaBlock’s data reveals a market where short-term reactions are muted, long-term payoffs are highly volatile, and the sheer size of a buyback programme is statistically irrelevant to its success.
For local stakeholders, the message is clear: buybacks are not a silver bullet; they are a context-dependent tool that requires a nuanced understanding of sector and strategy.
A unique laboratory
Singapore provides a distinct backdrop for this analysis. Unlike markets driven purely by capital appreciation, SGX-listed firms operate in a high-dividend yield environment with strict transparency regulations. The DeltaBlock study analysed the anatomy of buybacks across two distinct horizons: the short term and the long term.
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The period covered, 2020 to 2025, is particularly significant as it captures the volatility of the pandemic, the recovery phase, and shifting macroeconomic conditions, offering a stress-tested view of how capital allocation strategies hold up under pressure.
The short-term ‘non-event’
One of the most striking findings is the market’s lukewarm immediate reaction to buyback news. In the short term, the average price variation for SGX stocks was a modest +2.77%. While this is a positive shift compared to the pre-buyback period, it hardly represents the explosive rally that retail investors often hope for.
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The distribution of these returns was narrow and symmetric, indicating that the market largely shrugs off the news in the immediate aftermath. Valuation ratios such as P/E and EV/Ebitda remained remarkably stable during this period, reinforcing the idea that fundamentals do not shift overnight. The study notes that this lack of immediate upward shift could point to market scepticism or a delayed response mechanism common in the domestic market.
Where value unlocks
If the short term is a story of stability, the long term is a story of dispersion. The study found that significant price action tends to materialise well after the initial buyback window closes. Over the long term, the mean post-buyback price variation jumped to +7.89%, nearly triple the short-term gain. However, this reward comes with substantial risk. The standard deviation of returns also spiked significantly, suggesting that while buybacks can unlock shareholder value over time, they also expose investors to greater heterogeneity in outcomes.
This “stepwise increase” supports the hypothesis that the benefits of buybacks, capital structure optimisation and reduced equity bases take time to filter through to the share price.
Context is king
Perhaps the most critical insight is that industry context dictates the outcome. DeltaBlock’s research underscores that not all buybacks are created equal:
• Technology and financial services: In the long run, the technology sector emerged as a significant beneficiary. Tech firms engaging in buybacks saw surges in their P/E ratios, likely reflecting investor optimism regarding future earnings growth. Similarly, financial services demonstrated robust, consistent price gains over time.
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• Industrials and consumer defensive: These sectors acted as safe harbours. Between late 2020 and 2023, industrials exhibited strong positive reactions, potentially linked to post-Covid-19 recovery optimism. Consumer defensive stocks also showed positive variations, acting as stable assets in uncertain climates.
• Communication services: Conversely, this sector struggled. In 2024, companies here experienced significant negative short-term variations despite buyback activity. The data suggests that sector-specific headwinds can easily overpower the positive signalling of a buyback.
• Real estate: Firms in this sector tended to “deleverage” post-buyback in the long term, reducing debt/equity ratios to strengthen balance sheets rather than chasing aggressive valuation expansion.
The ‘size doesn’t matter’ anomaly
Counterintuitively, the study found that the scale of the buyback has almost no predictive power. Regression analyses on price variations against the total number of shares purchased and the total cost yielded results with virtually zero explanatory power.
Whether a company launches a massive repurchase programme or a tentative one, the statistical likelihood of share price appreciation remains unconnected to the volume bought. This implies that firm-specific factors and market-wide contexts dominate the outcome, rather than the mechanics of the financial engineering itself.
Implications for investors
For equity investors in locally-listed companies, this research offers several practical takeaways that challenge reflexive investment behaviours:
Curb the impulse to buy on news: Buyback announcements should not automatically trigger buy decisions. The data shows a modest short-term price impact of just +2.77% and high long-term variance. This suggests that outcomes depend heavily on company-specific factors and broader market conditions rather than the event itself.
Sector context matters enormously: Investors cannot view SGX stocks as a monolith. Technology and financial services firms appear better positioned to generate value through buybacks, while announcements from communication services or energy firms should be approached with greater scepticism, given their historical underperformance in this area.
Look beyond the mechanics: Since the size and structure of buybacks show no predictive power regarding price performance, investors must pivot to the underlying strategic rationale. The critical questions are: Is management signalling genuine undervaluation, or merely attempting financial engineering? Does the company have limited organic growth opportunities, making capital returns appropriate?
Monitor post-buyback fundamentals: EPS improvements may be cosmetic, a mathematical certainty when share count is reduced. Investors must watch if these are accompanied by ROE maintenance or improvement and prudent leverage management, as the study showed mixed results for these metrics post-buyback.
Implications for corporate finance
For locally-based corporate finance professionals and boards considering buyback programmes, the research suggests a need for strategic discipline:
No panaceas for value creation: Buybacks are not value-creation panaceas. The limited and heterogeneous effects observed across the sample indicate that repurchase programmes should be implemented only when genuinely appropriate — such as when shares are deeply undervalued or to optimise capital structure — rather than as a tool to prop up stock prices.
Avoid the ‘one-size-fits-all’ approach: Context is crucial. The efficacy of buybacks appears highly dependent on sector dynamics and macroeconomic conditions. A strategy that works for a bank optimising liquidity may fail for a telecom company facing structural headwinds.
Don’t oversell the scale: Since buyback size shows no correlation with outcomes, boards should avoid the temptation to announce headline-grabbing programmes in hopes of moving the market. Focus instead on sustainable, well-justified repurchases aligned with long-term strategy.
Communicate fundamentals over engineering: Given the sophistication of the local market, buyback programmes must be accompanied by clear communication about operational performance. Financial engineering alone will not sustain long-term value creation, as evidenced by the dispersion in long-term results.
Rethinking buybacks
This comprehensive analysis from DeltaBlock’s research team delivers an important message to the local corporate and investment communities: share buybacks are neither the value-creation tools they are sometimes promoted as, nor the wasteful capital deployments their critics claim.
Instead, they emerge as complex corporate actions whose effects are highly contingent on context, timing, and underlying business fundamentals. The consistent finding that buyback mechanics — such as volume and cost — do not predict outcomes suggests that success depends far more on why and when buybacks are implemented than on how much is repurchased.
For Singapore’s mature, well-regulated market, this nuanced reality should perhaps be unsurprising. The SGX’s transparency requirements and sophisticated investor base likely ensure that market participants look beyond surface-level buyback announcements to assess underlying value propositions.
As local companies continue deploying share repurchases as part of their capital allocation strategies, both corporate decision-makers and investors would do well to approach these programmes with clear-eyed realism about their limited and variable effects. The focus must always remain on genuine long-term value creation rather than short-term financial engineering.
Hamza El Khalloufi is the CTO and Head of Research at DeltaBlock
