Property and financial companies were among the biggest victims in a stock market sell-off in Hong Kong today after China submitted a security law proposal for the city that has fanned fears of fresh protests.
With the economy already on the ropes because of Covid-19, investors are worried about Beijing's increasing influence in the semi-autonomous finance hub and what that could mean for doing business there.
At its annual National People's Congress, China's lawmakers put forward a proposal to enact new legislation to strengthen "enforcement mechanisms" in Hong Kong.
Hong Kong was rocked last year by seven months of massive and sometimes violent pro-democracy protests that crippled the city.
Plans for the proposal had sparked warnings of "the end of Hong Kong" and fears of further unrest, while the US State Department said the move was "highly destabilising, and would be met with strong condemnation from the United States and the international community".
President Trump promised a response, saying: "I don't know what it is, because nobody knows yet. If it happens, we'll address that issue very strongly."
Markets are now worried that the city's freedoms - unseen on the mainland and protected by an agreement made before Britain handed the territory back in 1997 - could be curtailed.
US politicians have already passed a law that would strip the city's preferential trading status in the US if it no longer enjoys autonomy from the Chinese mainland.
The virus has sent the Hong Kong economy into a tailspin, fuelling a record 8.9% contraction in the first three months of the year, with worse expected in the current quarter.
The Hang Seng index sank 1,350 points (5.56%) to end at 22,930 in earlier trade.
Property firms - already under pressure from the virus - were battered with Sino Land collapsing more than 10%, while Sun Hung Kai Properties lost 7.8% and New World Development dropped 9.8%, while Wharf Real Estate Investment shed 9.4%.
Swire Pacific and CK Asset Holdings were each more than 8%.
The picture was no less gloomy for financials, whose profits in the city could be threatened by companies leaving.
Market heavyweight HSBC lost 6.9% and BOC Hong Kong shed 7.8%, while insurance giant AIA was down more than 9% and China Life dropped 6.8%.
The Hong Kong dollar, which has been at the strong end of its trading band with the US dollar for several weeks, also dropped as dealers began selling the unit.