Although the index closed higher on Friday, it fell by almost 4.8% last week. That was the biggest weekly decline of Hang Seng since August. The city was shaken by violent protests that escalated in recent days.
The local economy was also hit. The Hong Kong government warned Friday that mass protests could shrink the economy by 1.3% this year, marking the first annual recession since 2009.
This is another sign that the central bank is taking a "more proactive approach" to lower borrowing costs and support economic growth, said Julian Evans-Pritchard, a senior economics economist in China.
The move on Monday could cause banks to cut interest rates on loans on Wednesday, as banks' refinancing costs are lower, he wrote in a research report. The LPR is the interest rate that banks charge corporate clients for new loans. It is a new lending benchmark that China introduced in August and hopes to gradually replace the existing fixed lending rate.
In other regions of the region, the markets were relatively restrained. Japan's Nikkei 225 ( N225 ) increased by 0.3%. South Korea's Kospi Index ( KOSPI ) slipped by 0.3%.
Investors may be looking for more business news. Wall Street main indexes closed on Friday, buoyed in part by optimistic US-Chinese trade. Over the weekend, the Chinese Ministry of Commerce announced that Chinese and US negotiators have had a "constructive discussion" on a Phase 1
SoftBank ( SFTBF ) announced Monday a plan to merge its unit Z Holdings, formerly Yahoo Japan, with the messaging service provider Line Corp in 2020.
Z Holdings ( YAHOY ) and Line Corp ( LN ) last increased in Tokyo by 1.2% and 2, respectively 2%.
US futures eased slightly during Asian trading hours on Monday. Futures for the Dow ( INDU ) S & P 500 ( SPX ) and Nasdaq  ( COMP were all down.