China’s tech stocks fell again on Wednesday as firms backed by Tencent Holdings came under pressure after it pared investment in the sector for a second time in two weeks.

The Hang Seng tech index fell as much as 4% — the most since September — in a third day of declines, with overnight weakness in US peers also weighing on the price. The gauge is set for the lowest close since its inception in July 2020 with Tencent investees Bilibili, Meituan and JD.com among the biggest losers. 

The Chinese tech giant cut its stake in Singapore’s Sea Ltd on Tuesday — selling $3bn of shares — sparking concerns of similar actions at other firms amid Beijing’s regulatory crackdown. China’s US-listed tech shares fell overnight amid a broad sell-off in the sector, with traders worried about the rise in treasury yields putting pressure on stocks with extended valuations.

Tencent’s move is aiding expectations that the firm and its rivals may pare holdings as Beijing punishes the country’s tech giants for anticompetitive behaviour, including maintaining closed ecosystems that favour certain firms at the expense of others. Last month the company said it plans to distribute more than $16bn of JD.com’s shares as a one-time dividend.

“China’s anti-monopoly rules and regulators’ concerns about data privacy as well as web security may lead to more divestment in the country’s internet space in the coming months,” Bloomberg Intelligence analyst Cecilia Chan wrote in a note.

Tencent controlled a portfolio of investments worth $185bn at the end of September, Bloomberg Intelligence estimates.

Among Tencent-backed companies, live-streaming platform operator Bilibili dropped as much as 9.4%, while food delivery giant Meituan dropped as much as 8.6%. China’s No 2 online retailer, JD.com, fell as much as 7.2% and Tencent declined as much as 4.2%.

“China is at the stage of implementing many tightened policies and rules that the government announced last year on the technology sector,” said Linus Yip, a strategist at First Shanghai Securities. “The rangebound trading and heightened volatility may last through the first quarter.”

The recent spike in US treasury yields has also weighed on tech stocks across Asia. The MSCI AC Asia Pacific communication services index dropped as much as 2%, the most since December 20. SoftBank Group-backed search engine operator Z Holdings fell as much as 4.1%, while chipmaker Samsung Electronics declined as much as 2.5%.

On a more positive note, Alibaba Group Holding outperformed after Daily Journal, a newspaper and software business that counts Charlie Munger as its chair, nearly doubled its holding of the Chinese internet giant in recent months. 

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