Chinese stocks fell, with the benchmark index close to erasing its gains for the year, as a weaker yuan and developers’ debt woes added to persistent worries over growth and geopolitics.

The CSI 300 Index slid as much as 1%, with the energy and financial sectors leading the decline. The benchmark is among the worst performers in Asia this year, compared to a 3.4% advance in the MSCI Asia Pacific Index and double-digit gains for gauges in Japan and South Korea.

Chinese stocks have steadily fallen out of favor since a reopening rally fizzled at the end of January. Weaker-than-expected economic data have prompted a slew of Wall Street banks to slash their growth forecasts, while worries over worsening ties with Western countries have also hurt sentiment.

Developers’ financial woes were again in focus on Wednesday, with a number of local government financing vehicles struggling to repay debt on time.

Read: China LGFV’s Last-Minute Bond Payment Highlights Local Struggles

“The pessimism in the market is spreading, and negatives ranging from the yuan losing the 7 level to worries about LGFV payment are putting investors on the defense,” said Dai Yuzhong, a fund manager at Shanghai Shinyu Private Fund Management Co. “It looks like it’s going to be a grueling year.”

Tensions between China and the US have heated up as Beijing banned purchases of Micron Technology Inc.’s products on national security grounds, which ignited accusations of over-reach from US officials.

Selling of mainland shares by foreign investors continued after they offloaded more than $1 billion via trading links with Hong Kong on Tuesday.

Read: US Must Widen China Chip Curbs in Micron Riposte, Lawmaker Says

Investors this year have turned to more themed trades as the macro environment deteriorated. State-owned enterprises have witnessed eye-popping gains after regulators called for building a valuation system with Chinese characteristics, a term some interpreted as a signal to boost valuations. Artificial intelligence-related companies also saw frenzied trading earlier this year before enthusiasm cooled.

Attention is now on whether the economic recovery can gather pace and how sustainable that momentum will be. Developments in an intensifying geopolitical tussle with countries including the US will also sway sentiment.

--With assistance from April Ma.