SHANGHAI: Hong Kong’s benchmark index and Chinese A-shares extended sharp losses to end at multi-month closing lows on Tuesday, as investors worried over the impact of tighter government regulations.

What started off as a sell-off in shares bled into fixed income and foreign exchange markets by Tuesday afternoon, sending the yuan falling through psychologically significant levels and pushing Chinese 10-year government bond futures down 0.35%, as traders scrambled to come to terms with the rout.

“I can only understand that domestic speculative longs have surrendered and stampeded in the face of uncertainty,” said a Shanghai-based brokerage manager.

The onshore and offshore yuan turned around sharply from small gains against the dollar to weaken past 6.5 per dollar to more than three-month lows.

A trader at a foreign bank said the breach of the 6.5 level could lead to further weakness for the yuan.

“Banks are busy asking their clients to execute dollar conversions into yuan to take advantage of current prices,” she said.

In equity markets, Hong Kong’s benchmark Hang Seng Index fell 4.22% to its lowest close since November, bringing its losses since Thursday to more than 9.5%. The Hang Seng China Enterprises Index closed 5.08% lower.

The Hang Seng Tech index slumped through its previous record low to end down 7.97% on the day. It has lost more than 16% since Thursday’s close.