Alibaba’s U.S. Shares Fall to Lowest Since 2019 as China Cracks Down

A new round of proposed regulations sent Alibaba Group Holding Ltd. (Stocks BABA -4.91%) ’s U.S. listing to decline 4.9% on Tuesday to $173.73, its lowest close since October 2019.

The Chinese tech company’s American depository receipts have fallen more than 25% so far this year.

New draft guidelines released Tuesday by China’s top market regulator aim to prevent internet companies from adopting forced exclusivity and blocking competitors’ links and apps.

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Some of the most active bets tied to Alibaba shares were bearish put options that were tied to the share price plunging even further. Among the most popular options tied to Alibaba were put contracts pegged to the shares hitting $170, according to Cboe Global Markets data. Put options allow a trader to sell shares at a specific price, later in time.

The ADRs of Tencent Holdings Ltd. fell 4.1% on Tuesday to $55.15, the lowest level in more than a year.

Invesco’s Golden Dragon China exchange-traded fund, which has a third of its portfolio invested in mostly Chinese internet and direct marketing companies, fell 2.4% on Tuesday to $41.87, extending its decline year to date to 34%.

Another factor pressuring U.S.-listed Chinese businesses is Afghanistan, said George Ball, chairman at the investment firm Sanders Morris Harris. He said traders worry that China’s potential growing influence might empower the Chinese government to enact even more stringent regulations.

“The American inability to deal with the threats in Afghanistan is making traders think that China is going to be all the more stronger,” Mr. Ball said.

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