(Bloomberg) — The global selloff in technology equities continued in Asia on Tuesday amid fears of higher interest rates, with a benchmark tracking Chinese technology stocks in Hong Kong set to close at a record low.

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The Hang Seng Tech Index, which officially started in July last year, dropped as much as 2.5% to slip below the previous closing low on Aug. 20. The gauge, which counts Tencent Holdings Ltd. and Alibaba Group Holding Ltd. as key members, is headed for a fourth consecutive weekly decline.

Megacap technology stocks that rallied through the pandemic have declined as increased regulatory oversight and a sudden spike in yields triggered investor fears of a bubble. Chinese companies, already caught up in Beijing’s regulation drive, have been hit especially hard.

U.S. tech giants slumped overnight, with the so-called Faamg group losing $238 billion in market value and Amazon.com Inc. incurring year-to-date losses. Hong Kong’s tech measure is now down more than 45% from a February peak and its members have lost about $1.4 trillion in market value.

“It’s quite the perfect storm of headwinds at the moment,” said Bloomberg Intelligence’s analyst Matthew Kanterman. “The confluence of factors including continued regulatory headwinds, rising interest rates and China property contagion fears will probably keep weighing on China’s tech sector in the near-term.”

Online entertainment platform Bilibili Inc. dropped more than 5% in Hong Kong, among the worst laggards on the gauge, while Alibaba Group fell as much as 3.7%. Both stocks are trading at record lows. Industry bellwether Tencent slumped as much as 2.5%.

The selloff extended to other parts of Asia. Z Holdings Corp., the SoftBank Group Corp.-backed search engine operator, ended down 5.6%, the most in five months, while Naver Corp., monikered by some as the Google of South Korea, closed 3% lower.

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Investors are worried how inflation and regulations coming out of China will impact the sector, Christina Woon, an investment manager at abrdn told Bloomberg in a radio interview. “People are adopting a bit more more of risk-off attitude here and that’s’ probably likely to persist” until authorities ease some of those pressures, she added.

China’s tech sector has been buffeted as authorities tightened controls on private enterprise to meet President Xi Jinping’s vision of “common prosperity.” Concerns of global contagion from the potential collapse of indebted property developer China Evergrande Group have added to the rout.

The worries unseated Hong Kong as Asia’s No. 2 market behind Japan in late July and pushed the financial center’s benchmark Hang Seng Index into a bear market in August. The Hang Seng China Enterprises Index is this year’s worst-performing major stock gauge globally.

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While China tech stock valuations have tumbled, “without a catalyst or resolution to the various headwinds, it’s hard to see trends reversing in the near term,” said Kanterman.

(Updates share prices throughout and adds abrdn’s comments in eighth paragraph.)

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