HSBC stocks surged almost 4 percent to a three-month high on Tuesday after the bank announced it had set in motion a plan that could lead to it buying back a yet-to-be-specified amount of shares which were trading below book value.

Although the news didn't seem to have a lasting impact on the stock market, the proposed share buyback program of Hong Kong's largest listed blue chip company has raised the question - whether Hong Kong stocks were oversold during the prolonged market doldrums. HSBC is not the only major company with such a plan.

Henderson Land Development Co - a member of the property oligarchy - is known to have been a key buyer of its own shares although Lee Shau-kee, its charismatic founder and chairman, had earlier made known his dim views of the economy in general and the property sector in particular.

Some economic analysts now begin to wonder if the worst is over. They point to the latest set of mainland economic data showing that the economy is stabilizing despite the cautious prognosis of the International Monetary Fund. Although the price of crude has remained weak, commodity prices have been rising in the past few months, prompting many investors to zero in on resource stocks in the Hong Kong and mainland markets.

In Hong Kong, property agents said they have been encouraged by the rise in turnover in the secondary market so far. But, it's still too early to say if the property market's cyclical downside is over. A collapse in homes prices seems unlikely as demand remains strong.

The apartments at a high-class residential development put up for pre-sale earlier this week were sold out within one day, indicating that media reports have grossly exaggerated the so-called property glut.

It's true that retail rentals in the city's busy tourist and commercial districts have declined. But that doesn't mean the entire retail industry has tanked. Shopping mall landlords in residential areas have reportedly done the heartless thing of driving out many existing tenants by raising their rents. Of course, landlords don't do such things for the kick of it. They do it because they're confident there's still demand.

It can be assumed that corporate captains don't buy back their companies' shares out of kindness or pride. There's a commercial reason for doing so and they should know.

(HK Edition 04/21/2016 page9)