China's A-share market. Photo: AFP
The capital market plays an important role in resources allocation, asset pricing and mitigating risks. Photo: AFP

At least 18 listed companies issued repurchase announcements on Thursday, while seven more announced their intention to increase their holdings during the biggest market slump since February 2016, The Paper reported.

A company stock repurchase can optimize capital structure, increase earnings per share and stabilize or push up the stock price, said Xun Yugen, a strategic analyst at Haitong Securities.

So when the company believes that the market underestimates the true value of its stock, repurchasing sends a message to the market that the stock price is undervalued, Xun added.

Since 2018, both the number of companies conducting stock repurchases and the amount of repurchasing has hit a new high.

The total amount reached 28.74 billion yuan so far, much higher than the 8.3 billion yuan in 2017 and 10.5 billion yuan in 2016.

The significant expansion of stock repurchasing means that the funds will flow into the A-share market, which will help to improve market capitalization and form a certain supporting role during a market downturn, Xun said.