Under Secretary for Financial Services and the Treasury Joseph Chan said on Monday the government will pay close attention to the stock market and ensure that the city remains financially stable.

Hong Kong stocks plunged on the first trading session after Beijing hit back over the US imposition of an extra 34 percent tariffs on Chinese goods by announcing reciprocal levies of the same quantum on American goods.

The Hang Seng Index was down about 9 percent in early trading on Monday, with tech, solar, banking and online retailers' shares plunging.

Chan told lawmakers that Hong Kong has a strong financial base that can deal with any volatility in the market and that authorities will stay vigilant to market changes.

“Our fundamentals are very strong, liquidity is high, and therefore, we have been fair and open in our operation," he said.

"Our core and fundamentals are very strong,” he said.

“The government will continue to be vigilant together with the regulators to monitor closely the market to maintain a stable financial market.” (additional reporting by Reuters)