The flag (right) of the Hong Kong Exchanges and Clearing Limited (HKEX) is hoisted next to Chinese national flag (center) in the Hong Kong Special Administrative Region on Aug 16, 2016. (ANTHONY WALLACE / AFP)

HONG KONG - Hong Kong stocks closed down 1,106.21 points, or 4.23 percent, to 25,040.46 points on Monday.

The benchmark Hang Seng Index traded between 24,948.38 and 25,321.28. Turnover totaled 169.64 billion Hong Kong dollars (about US$21.83 billion).

We continue to favor Chinese and EM Asia equities - as there is light at the end of the COVID-19 tunnel in China and valuations remain compelling despite the recent rebound in China onshore equity prices

David Chao, Global market strategist, Asia Pacific (ex-Japan) at Invesco

Hong Kong stocks lost 916.12 points, or 3.50 percent, to close Monday's morning session at 25,230.55 points. 

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Hong Kong stocks nosedived by as much as 4.28 percent on Monday morning as plunging oil price hammered global stock markets already roiled by the global outbreak of COVID-19 caused by a novel coronavirus. 

The Organization of the Petroleum Exporting Countries failed to reach a deal with Russia regarding production cuts on Friday, prompting Saudi Arabia to cut oil price. Oil prices plunged around 25 percent on Monday, heading towards their biggest daily loss since 1991 after Saudi Arabia slashed prices and set plans for a big increase in crude production in April.

Investors took flight in apprehension of a price war between some of the world's main oil producers. 

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"This will also impact US shale producers as well as major national oil companies. We expect credit spreads to likely widen in these sectors and respective sovereigns," said David Chao, global market strategist, Asia Pacific (ex-Japan) at Invesco.

"We continue to favor Chinese and EM Asia equities - as there is light at the end of the COVID-19 tunnel in China and valuations remain compelling despite the recent rebound in China onshore equity prices," Chao said. 

A large screen at Hong Kong's Central captures the plunge of Hang Seng index by 3.5% on March 9, 2020. (CALVIN NG / CHINA DAILY)

Pamela Lin contributed to the report