China Crackdown Rout Spreads Amid Fears of Foreign Selloff

(Bloomberg) -- A rout in Chinese shares in the crosshairs of Beijing’s regulatory crackdown extended into global bond and currency markets Tuesday as unverified speculation swirled U.S. funds are offloading China and Hong Kong assets.

The Hang Seng Tech Index, a gauge of many Hong Kong-listed Chinese stocks, dropped 10%, falling into negative territory exactly one year after it was first launched. China’s CSI 300 Index fell close to 4%, and the yuan slid to its lowest since April against the dollar.

Read More: China’s crackdown rocks investors, with losses in Chinese tech and education stocks now exceeding $1 trillion since February.

Treasuries climbed with the greenback and the yen as investors sought havens, while China’s bonds slumped. Unverified rumors the U.S. may restrict investments in China and Hong Kong exacerbated the move, according to traders. U.S. stock futures pointed lower.

“Although we can’t verify if it’s true or not, the market fears that foreign capital will flow out from the Chinese stock market and bond market on a large scale, so sentiment is badly hurt,” Li Kunkun, a trader from Guoyuan Securities Co. said of the speculation.