Hong Kong stocks hit an almost four-year high on Monday as region-wide investors priced in positive signs of an imminent cut in interest rates by the United States Federal Reserve.

The benchmark Hang Seng Index rose 1.94 percent, or 490.77 points, to close at 25,829.91. The Hang Seng TECH Index, which represents the 30 largest technology companies listed in the special administrative region, advanced 3.14 percent to 5,825.09 points, while the Hang Seng China Enterprises Index surged 1.85 percent to 9,248. As market sentiment heats up, the daily turnover on the main board reached HK$369.7 billion ($47.39 billion) -- up by more than 29 percent from Friday.

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On the Chinese mainland, stock indexes in Shanghai and Shenzhen continued their strong momentum, with the benchmark Shanghai Composite Index surging to a decade's high of 3,883.56 points on Monday -- up 1.51 percent. The day’s turnover exceeded three trillion yuan -- the second-highest figure on record in the history of the A-share market.

Global capital markets are interpreting US Fed Chair Jerome Powell’s speech on Friday as having opened the door to lower interest rates next month. Cheaper borrowing costs would generally be a boon to risky assets, boosting liquidity and lifting stock prices.

As investors quickly bumped up bets on a much-awaited shift in the Fed’s monetary policy, Hong Kong-based Wing Fung Financial Group said in its latest report that a rate-cut decision isn’t set in stone as Powell’s comments should be viewed as a way to manage the market’s expectations in a progressive manner.

“Having said that, a dovish climate continues to support risk appetite and boost market sentiment. Hong Kong stocks, tracing the gains of US markets, are benefiting from the expectations,” the research house said.

“While I, personally, don’t believe that rate cuts are needed at this time, I now believe that a rate reduction seems likely before the end of this year as a form of insurance policy against negative outcomes,” said Ronald Temple, chief market strategist of financial advisory and asset management firm Lazard.

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Investors were banking on an 87.3-percent chance of a rate cut next month following Powell’s remarks -- up from 84.7 percent the day before -- according to CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

Labubu maker Pop Mart International, China Telecom, and JD Logistics – three companies that will be added to Hang Seng Index from Sept 8, joined in the rally on Monday.

Pop Mart jumped 1.94 percent to close at an all-time high of HK$326.60. JD Logistics soared by 7.39 percent to HK$13.95, while China Telecom edged up 0.81 percent to HK$6.23.

Following the change in the constituents of the benchmark index, Goldman Sachs said consumer retail, software and services, and automotive stocks are poised to see the largest passive inflows, ranging from $300 million to $780 million.

Contact the writer at sophialuo@chinadailyhk.com