The benchmark Hang Seng Index lost 0.75 percent on Monday to close at 21,092 on a market turnover of HK$277 billion ($35.5 billion). The Hang Seng China Enterprise Index was down 0.54 percent at 7,579, while the Hang Seng TECH Index dived 1.43 percent to close at 4,668.  

The market does not expect major decisions to be made until after the conclusion of the meeting of the National People’s Congress Standing Committee scheduled for late October or early next month.

UBP Asia senior economist Carlos Casanova said ultra-long maturity and special purpose bonds worth about two trillion yuan ($282.5 billion) would be needed to enhance their ability to support the economy and real estate sector.

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Betty Wang, lead economist at think-tank Oxford Economics, said the announcement of the fiscal stimulus confirmed that policy coordination between monetary and fiscal policy is likely although such coordination is rare.  

“We think the central government will take a leading role in supporting growth and is likely to increase its spending by up to three trillion yuan in 2025 to support infrastructure investment, replenish large commercial banks’ tier-1 capital and help targeted groups, such as university students,” she said.

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“We expect higher equity volatility in the coming days as markets reassess the policy pledges. Along with the stimulus, the upcoming United States presidential election, global trade tariffs, and potential tech controls are other risk factors at play,” the UBS global Wealth Management Chief Investment Office said.

“While we do not expect investors to chase the mainland equity rally, those who are under-allocated to mainland equities could use the dip to add exposure to Internet and consumer names. For defensive exposure, we prefer high-yielding stocks in financials, utilities, energy and telecoms, especially State-owned enterprises in view of their capital management reforms,” UBS said.