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SHANGHAI: Chinese stocks plunged on Monday as a continued surge of COVID cases further clouded the economic outlook, while regulatory concerns and US delisting risks sent Hong Kong-listed tech giants to a new low, dragging down the Hang Seng benchmark.

The rapid spread of the virus in China is heightening investors' worries over slowing growth, highlighted on Monday by figures showing new bank lending fell more than expected in February while broad credit growth slowed.

"I think the outbreaks impose downside risk to China's economy, at least in the next few months," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The CSI Tourism index plunged 6.3%, as investors fretted over the impact of strict control measures. It led a 3.1% fall in the blue-chip CSI300 index, and a 2.6% drop in the Shanghai Composite - the index's biggest daily drop since July 24, 2020.

The smaller Shenzhen Composite Index fell 2.9% and the start-up board ChiNext Composite index was 3.6% weaker.

Falls were exacerbated by heavy selling by foreign investors through China's Stock Connect programme. Refinitiv data showed outflows totalling 11.04 billion yuan ($1.74 billion) on the day.

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China has reported more local symptomatic COVID-19 cases so far this year than it recorded in all of 2021, as the highly transmissible Omicron variant triggers outbreaks from Shanghai to Shenzhen.

The surge, which has seen China report its highest daily infections figures in two years, potentially complicates Beijing's "dynamic-clearance" ambition to halt the spread as quickly as possible.

China's southern technology hub of Shenzhen suspended public transport including buses and subways from Monday, and the financial hub of Shanghai locked down some housing and office compounds.

Adding to investors' concerns over the regulatory environment, China's cyberspace regulator issued a new set of draft measures on Monday aimed at protecting minors, demanding online gaming, livestreaming, audio and video platforms to set up a "youth mode" for minors.

The development further dented the already fragile sentiment in tech names, with the Hang Seng Tech Index shedding 11% in its biggest intraday plunge to touch a new low.

It extended the tech rout seen since last Friday, after the US Securities Exchange Commission identified Chinese companies that will be delisted if they do not provide access to audit documents.

Worries about the possible delisting of Chinese companies from US exchanges "sent a bit of a shiver over the market," said Louis Tse, managing director at Wealthy Securities in Hong Kong, adding that he expected the market to "test lower ground" in the coming days.

Furthermore, Tencent Holdings is facing a potential fine, which could be at least hundreds of millions of yuan, for violations of some central bank regulations by its WeChat Pay mobile network, the Wall Street Journal reported on Monday.

The Hang Seng index fell 5.0% to 19,531.66, the lowest since March 2016, while the China Enterprises Index lost 7.2%, to 6,555.55 points.

The Hang Seng Mainland Properties Index also witnessed its worst daily performance, closing down 12.6% and marking its lowest level since January 2017.

Household loans, mostly mortgages, suffered a rare contraction of 336.9 billion yuan in February, compared with 843 billion yuan in the prior month, pointing to continued weakness in China's property market, a major economic growth driver.

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