China stocks slumped on Friday, tracking regional peers lower amid strength in the US dollar and a pull-back in technology shares, with strong foreign outflows weighing on the market. Foreign portfolio flows have turned.

About 33 billion yuan ($4.54 billion) left the mainland this month via the Northbound leg of the Stock Connect Scheme, following four months of net inflows.

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The Southbound leg also reported 129 billion yuan of outflows from the mainland to Hong Kong so far this year.

Additionally, investors remained cautious as the Chinese Communist Party’s central committee is set to gather in July for a key meeting known as a plenum, the third since the body of elite decision-makers was elected in 2022, focusing on reforms amid “challenges” at home and complexities abroad.

“For the upcoming ‘Third Plenum’, we expect the reform focus to be on both containing left-tail risks and growing right-tail potential for China in the ‘post-property’ era,” said Goldman Sachs analysts in a note.

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“Rather than a ‘big bang’ policy initiative, we expect a continuation, or even scale-up, of existing reform measures on a multi-year horizon.”

At the midday break, the Shanghai Composite index was down 0.39% at 2,993.57 points, below a critical level of 3,000 points.

China’s blue-chip CSI300 index was down 0.6%, with its financial sector sub-index lower by 0.29%, the consumer staples sector down 1.41%, the real estate index up 0.27% and the healthcare sub-index down 0.94%.

Chinese H-shares listed in Hong Kong fell 1.92% to 6,429.92, while the Hang Seng Index was down 1.71% at 18,021.56.

The smaller Shenzhen index was down 0.34%, the start-up board ChiNext Composite index was weaker by 0.89% and Shanghai’s tech-focused STAR50 index was down 0.72%.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.64% while Japan’s Nikkei index was up 0.01%, dragged lower by a pull-back in technology shares, tracking a mixed session on Wall Street overnight.