Hong Kong stocks rose on Tuesday as investor sentiment got a boost amid the suggestion of a stock-stabilization fund worth 2 trillion yuan by a state-supported think tank and upbeat expectations for corporate earnings.

The Hang Seng Index soared 1.27%, or 261.2 points, to close Monday's trade at 20,760.15. The Hang Seng China Enterprises Index added 1.56%, or 115.23 points, to 7,478.23.

Investor sentiment was buoyed after the Institute of Finance & Banking under the Chinese Academy of Social Sciences recommended the setting up of a stock market stabilization fund through the issue of 2 trillion yuan of special treasury bonds, an SCMP report said.

The institute believes the fund would contribute to capital market stability and foster consistent economic growth.

Additionally, an analyst at Orient Securities, Xue Jun, said better earnings can be expected following the stimulus packages recently introduced by China.

Four Hang Seng Index constituents have disclosed third-quarter results till date, with an average profit boost of 55%, up from a profit growth of 7.7% in the prior quarter, SCMP said citing Bloomberg data.

In corporate news, beverage producer China Resources Beverage (HKG:2460) made a strong trading debut on the Hong Kong bourse today, closing the day's trade at HK$16.68 per share, up 15% from its IPO price of HK$14.5 per share.

Additionally, Beijing Biostar Pharmaceuticals (HKG:2563) launched its initial public offering in Hong Kong Tuesday, looking to raise up to HK$320.9 million. The pharmaceutical firm is offering 14,588,000 H shares at between HK$16 and HK$22 apiece.