(Bloomberg) — Chinese tech shares were headed for record lows in Hong Kong, as Didi Global Inc.’s announcement to start U.S. delisting and rising scrutiny on mainland firms traded there dealt a further blow to already soured sentiment.

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The Hang Seng Tech Index, which tracks mostly big Chinese technology giants traded in Hong Kong, dropped as much as 2.7% to be on track to hit its lowest closing level since the gauge was launched in July last year. Members of the index have seen about $1.5 trillion of combined market value evaporate since a February peak.

Ride hailing giant Didi said Thursday it has begun preparations to withdraw from U.S. stock exchanges and will start work on a Hong Kong share sale, yielding to demands from Beijing that had opposed its American listing. The news came after U.S. regulators announced a final plan for putting in place a new law mandating foreign companies open their books to American scrutiny or risk being kicked off its exchanges within three years.

“American investors will be keen on selling the ADRs if they are forced to delist from the U.S., which will add pressure on their share prices in Hong Kong,” said Gary Ching, an analyst at Guosen Securities (HK) Financial Holdings Co.

Chinese tech companies have already been grappling with Beijing’s tightened regulations on areas ranging from digital finance and data security to online games and overseas listings. Separately, U.S. Securities and Exchange Commission in July vowed to require more information for Chinese firms seeking listings in the country.

Didi is aiming to file for the Hong Kong listing around March, people with knowledge of the matter said.

A delisting from the U.S. stock market could raise the Chinese firms’ cost of capital, according to a Bank of America report last month. There are more than 270 Chinese ADRs traded in the U.S. with a combined market capitalization of $1.8 trillion, and over 150 of them do not qualify to list in Hong Kong, the report said.

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“Generally Hong Kong equities trade at lower multiples” than their U.S. peers, said Bloomberg Intelligence analyst Marvin Chen. “In the current environment, definitely their valuation expectations will be reset” if they seek re-listing in Hong Kong, he added.

NetEase Inc., Bilibili Inc. and JD.com Inc., which all have American Depositary Receipts, were among the top losers in the Hang Seng Tech Index on Friday, each losing more than 7.3%. The declines followed the Nasdaq Golden Dragon China Index’s drop overnight to the lowest in almost 19 months in the U.S.

“Didi will be the template for other Chinese companies listed in the U.S.,” said Justin Tang, head of Asian research at United First Partners. “A delisting in the U.S. will see a company lose exposure to investors who can only trade on the U.S. exchanges.”

The Hong Kong gauge has lost about 45% since a February peak, with declines accelerating in recent weeks after disappointing earnings season and a report that China plans to ban companies from going public on foreign stock markets through variable interest entities.

The continued selloff this week came after big international financial institutions increased their calls for bargain hunting last month. Goldman Sachs upgraded offshore Chinese equities to overweight from market-weight while BlackRock Inc. has had more neutral positions on China, up from underweight.

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