Hong Kong stocks slumped, completing the biggest monthly loss in about three years, as traders trimmed bets amid a surge in regulatory risks in China and market volatility. The Hang Seng Index fell 1.4 per cent to 25,961.03 on Friday, dragging the benchmark to a 5 per cent loss for the week. The blue-chip index lost almost 10 per cent for the month of July, the most since a 10.1 per cent drop in August 2018, according to Bloomberg data. The Hang Seng Tech Index declined 2.6 per cent, bringing the slide to 16.9 per cent this month as 27 of its 30 members fell. Tencent Holdings slipped 2.6 per cent to HK$479. Meituan tumbled 5.9 per cent to HK$215 and Alibaba Group Holding retreated 4.2 per cent to HK$189. The rout sparked by China’s clampdown on private education firms since July 23 has erased at least US$860 billion of market value in Hong Kong and mainland markets through Thursday. A measure of market volatility hit the highest level in about 14 months as foreign investors dumped their holdings. “Technical buying is fading,” said Alex Wong, a director at Ample Finance Group in Hong Kong. “Foreign investors who recently exited the market will not return so quickly unless Beijing dramatically reverses its policy stance.” After the latest crackdown, investors will rethink owning Chinese stocks as a long-term holding, he added. This month’s losses, starting with the cybersecurity review of ride-hailing firm Didi Chuxing, have stunned global funds who deemed Chinese stocks as a core holding as they gained more weight in global equity benchmarks. The Hang Seng and CSI 300 Index have trailed the MSCI World Index by the widest margins since early March. Investors including Cathie Wood’s flagship Ark Innovative ETF have sold almost all of its holding of Chinese stocks by this month, from about US$1.66 billion in February. Investors remained cautious even after regulators in Beijing said its policy actions were meant to improve the sector, while commentaries and reports in state-run media sought to shore up sentiment. China is still open and supportive of its companies seeking a listing in offshore markets, Xinhua News Agency said. Education companies lost traction even as Beijing said its moves to stamp out for-profit off-campus classes were meant to improve the sector and the broader economy. Koolearn Technology Holding fell 3.4 per cent, Scholar Education Group slumped 15.8 per cent. The Tracker Fund of Hong Kong declined 1.2 per cent, after it announced overnight that US persons will not be allowed to buy units in the exchange-traded fund. The ETF is not an appropriate investment vehicle” for current unit holders who fall into the category prescribed in the US executive order. The fund was among the most actively traded this week as Hong Kong regulators study the possibility of changing the manager, the South China Morning Post reported on Friday. Stocks in mainland markets fell. The CSI 300, which tracks the biggest stocks in Shanghai and Shenzhen, slipped 0.8 per cent to bring the losses this week to 5.5 per cent, the most in five months. A string of Covid-19 infections increasingly emerged in several Chinese provinces. Some cases spread from crowded tourist sites during the summer season. triggering warnings from local governments including Beijing. Liquor stocks declined in the mainland markets on concerns sales will be affected by limits on social gatherings. Kweichow Moutai, the world’s most valuable liquor distiller, fell 4.1 per cent to 1,678.99 yuan, the lowest since mid-November. Its rival Wuliangye Yibin slid 6.1 per cent to 220.75 yuan. Tsingtao Brewery lost 8.8 per cent to 80.28 yuan.