(Bloomberg News) — Chinese tech shares plunged following overnight weakness in U.S. counterparts, and investors still feeling the effects of wild price swings were confronted with new regulatory concerns.

Hong Kong’s Hang Seng Tech Index plunged as much as 6.4% in early trading, the most since July. JD (NASDAQ.com) and Trip.com were the worst performing. The benchmark fell 3.3%. 

Friday’s selloff comes as the U.S. Securities and Exchange Commission identified five Chinese firms that could be subject to delisting if they failed to comply with certain auditing requirements. Overnight, the Nasdaq Gold Dragon China Index fell 10%, the largest slide since Oct 2008. However, the Chinese securities regulator stated that it would cooperate with the U.S.

While analysts say the risks of delisting is unlikely to materialize in the near term, the news unnerved investors already on edge following Beijing’s yearlong crackdown and the fallout from the war in Ukraine. The China tech gauge is down more than 60% since its peak in February 2021.

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The SEC update is “a reminder for the regulatory risks surrounding Chinese equities once again and the lack of positive catalysts overnight may potentially aggravate the downside move,” said Jun Rong Yeap, a market strategist at IG Asia Pte Ltd.

This week saw volatility in equity benchmarks both onshore and Hong Kong, as prices fluctuated sharply during sessions of investor jitters. Beijing’s crackdown on private enterprise has appeared to grow in recent weeks after authorities asked food delivery platforms to cut fees charged to restaurants and warned of risks in investing in products linked to the metaverse. 

Meanwhile, China’s CSI 300 Index declined as much as 2.2%. 

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