A flagship store of Xiaomi in Beijing, capital city of China Photo: VCG

Chinese smartphone maker Xiaomi will buy back shares for up to HK$10 billion ($1.28 billion), a move that demonstrates the confidence in its own business outlook and prospects and will ultimately benefit the company and create value for shareholders, the firm announced on Tuesday.

The board of directors believes that the company's existing financial resources are sufficient to support the share buyback while maintaining a healthy financial position, Xiaomi said.

The firm has previously unveiled buyback plans on repeated occasions. The most recent came in early March this year, when Xiaomi announced a buyback plan of HK$10 billion on the open market.

Xiaomi's move also follows Alibaba, which on Tuesday announced the biggest stock buyback by a listed Chinese company by expanding its share buyback program to a record $25 billion.

The company's share buyback program will be effective for a two-year period through March 2024. As of March 18, 2022, Alibaba had purchased a total of 56.2 million American depositary shares (ADS) under the previously announced share buyback program, at approximately $9.2 billion, the company confirmed.

Alibaba shares soared 11 percent in Hong Kong on Tuesday after the e-commerce giant ramped up the repurchase program.

The previous crash of Chinese tech firms shares has reached an 'irrational level'. Repurchase will help stabilize market expectations and safeguard shareholders' rights and interests, a veteran market watcher told the Global Times on Tuesday.

The rallies in the stock market may also indicate that the sector could see a U-turn in investors sentiment, the observer noted.

China's top financial affairs watchdog, the State Council's Financial Stability and Development Committee, vowed on March 16 to take measures to maintain stability of its housing and capital markets and shore up economic growth during the first quarter of 2022.

The body vowed to properly address recent market concerns, including the problems hamstringing the property sector and to seek a cooperation scheme with the relevant US regulator to tackle the issue of US-listed Chinese stocks.

Stocks on the Chinese mainland and Hong Kong markets as well as US-traded Chinese shares largely continued to rebound as the meeting gave the markets a much-needed confidence boost.

Given the optimistic momentum in the market, more tech firms may follow suit with buyback plans, analysts said.