Hong Kong stocks rebounded over 2 per cent on Wednesday, with the benchmark set to break its nine-session losing streak as oil majors surged and the imminent US interest rate decision set to remove a major uncertainty currently haunting markets.

China shares also advanced, as investors were encouraged by news that China plans to issue significantly more government bonds next year to aid the economy.

By midday, Hong Kong's Hang Seng index jumped 2.2 per cent to 21,749.09 points, while the Hong Kong China Enterprises Index advanced 2.8 per cent to 9,601.29.

The Hang Seng index had declined for nine sessions in a row and traded at merely eight-times earnings, compared with a multiple of 19 for the S&P 500 index, triggering bargain-hunting amid improving sentiment in global equity markets.

In China, the blue-chip CSI300 index rose 0.4 per cent to 3,710.25 points while the Shanghai Composite Index gained 0.7 per cent to 3,535.21 points.

Both Hong Kong and China markets got a boost from a sharp rally in oil stocks on Wednesday after the Chinese government said it would "postpone" expected cuts in retail petrol and diesel prices.

The government said the decision was aimed at restraining oil consumption and spurring environmental protection, but some analysts said the real purpose is to support refiners' profitability.

"We believe there is an ulterior motive - to protect profits of the three oil majors," wrote Oliver Barron, analyst at China-focused investment bank NSBO, referring to PetroChina , Sinopec and CNOOC .

"PetroChina has been selling pipeline assets to remain profitable this year, and this move sounds like it's less about air pollution and more about profitability worries."

PetroChina jumped 6.1 per cent in Hong Kong and 1.9 per cent in Shanghai, while Sinopec shares were up 10.1 per cent, and 3.1 per cent, respectively, in the two markets.

In its annual strategy report, Goldman Sachs maintained its "constructive" view on China stocks, setting an end-2016 target of 4,000 points for CSI300, or a roughly 10 per cent return from the current level.

Goldman expected the market to rise on "potential reform progress and pro-growth policies", but also identified numerous risks, including growth deceleration, forex uncertainty, and potential liquidity concerns triggered by China's planned IPO reforms.

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