The Hong Kong stock market rebounded after a few earlier hiccups, with investors anticipating that the announcement by the country’s central bank about swap facilities will boost market liquidity, and amid expectations that the country’s finance department will issue additional special government bonds to stabilize the market.

The Hang Seng Index rose 3 percent to close at 21,251 on Thursday with a market turnover of HK$325.3 billion ($41.8 billion). The Hang Seng China Enterprise Index gained 3.5 percent to close at 7,620 while the Hang Seng TECH Index soared 2.1 percent to close at 4,736.

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Market sentiment was boosted by the People's Bank of China’s announcement that it would create the first batch of "securities, funds, and insurance companies swap facilities" at a scale of 500 billion yuan ($70.65 billion), facilitating qualified institutions to pledge their assets to the central bank in exchange for liquidity. Bullish sentiment was also bolstered by the expectation that the Ministry of Finance will issue additional special government bonds to stabilize the market.

The HSI tumbled around 9.5 percent, or 2,172 points, on Tuesday — the biggest one-day drop ever in terms of point level, pushing market transaction value to a record-high level. Market jitters were driven by the profit-taking positions of global investors when the market was disappointed that the country’s top economic planner, the National Development and Reform Commission, did not unveil clear measures to boost the economy during its much-anticipated press conference.

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The market now expects the Ministry of Finance to announce additional fiscal measures in the press conference scheduled for Saturday.

Looking forward, Switzerland-based wealth management group Julius Baer said it expects the Hong Kong share market to register slower price gains with higher price volatility, while the earnings potential and valuation level will be back on investors’ radar.

“We expect investors to consolidate their mainland stock exposure by selling names with weaker fundamentals and adding quality stocks. We recommend focusing on potential policy beneficiaries and stocks with attractive valuations in the near term, while maintaining long-term allocation to stocks with strong shareholder returns,” said Richard Tang, China strategist and head of Hong Kong research at Julius Baer.

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CCB International forecasts that the HSI will fluctuate between 20,000 and 25,000 points, the HSCEI will move between 6,800 and 9,000 points, and the Hang Seng TECH Index will span between 4,200 and 6,000 points.

“Weaker-than-expected mainland supportive policies and the sluggish mainland economic recovery; increased political uncertainty from the upcoming US presidential election in November; the pace of subsequent US rate cuts deviating from market expectations; the risk of a new round of protectionism from Europe and the United States; as well as geopolitical risks are the downside risks faced by the Hong Kong market,” CCB International analyst Cliff Zhao and Wilson Zou said.