Chinese stocks listed in Hong Kong slumped as trading resumed after a holiday, hurt by a broad risk-off mood across the region and continued concern about the nation’s economic outlook.

The Hang Seng China Enterprises Index slid as much as 3.4%, the most since July. A measure of Asian shares headed for its lowest close since November after hawkish signaling from the Federal Reserve intensified a selloff in Treasuries and boosted the dollar. Equities listed in the Asian financial hub are linked more closely to foreign fund flows than onshore Chinese shares, making them typically more vulnerable to global events.

The poor start to a new quarter reflects the entrenched pessimism that has plagued Chinese equities for much of this year. Tuesday’s broad declines in Hong Kong came despite positive data from China’s holiday weekend, which showed a doubling in tourism revenue from a year earlier. A report from Morgan Stanley showed global funds further trimmed their Chinese stock holdings in September, lowering their average position on the market to the lowest level since 2020.

Technology and financial stocks were among the biggest drags on the HSCEI gauge, which wiped out its gains from Friday. Those were spurred by hopes that spending during China’s ongoing Golden Week holiday will help lift sentiment in one of world’s worst-performing major equity markets this year. Trading in mainland China remains shut this week.

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