In the third day of plummeting values for China’s tech giants, Tencent’s shares lost 10%, Alibaba dropped 7.7%, JD.com shed 8.9% and Meituan fell 17%.

Hong Kong’s Hang Seng benchmark was down more than 5% on Tuesday. Meanwhile, in mainland China, the CSI 300 index of Shanghai- and Shenzhen-listed stocks lost 3.5%.

The sharp sell-off in Chinese and Hong Kong shares spilled over into European markets and Wall Street futures are pointing to a lower open.

Chinese tech stocks were dropping again Tuesday for the third consecutive session as markets become increasingly jittery over concerns of a regulatory crackdown by Beijing.

The sell-off has been focused on China’s $100 billion private education industry following a leaked government memo highlighting incoming new, tougher severe regulations which will prevent companies in the sector accepting foreign investments, raising capital through the stock market, or teaching outside school hours, amongst other rules.

This tough new approach being taken by Beijing has spooked the tech sector which is already on high alert amid fears that the government wants more control over private enterprise.

The effect has been wiping hundreds of billions of market value from Chinese largest tech giants.

It can be expected that some investors will swoop in and view these events as a major buying opportunity; as a chance to top-up their portfolios within the booming Chinese economy.

They may have a point – these shares do look like bargains.

However, they must exercise extreme caution as the situation remains highly unpredictable and any further similar actions – or even suggestions - from Beijing will mean more, sustained volatility and sell-offs.

It could be a long time until there is clarity.

A good fund manager will help investors seize the opportunities and sidestep the risks by seeking out the inevitable winners and losers from the Chinese government’s possible regulatory crackdown.

As always, investors should be as diversified as possible in order to maximise returns relative to risk. This means geographical, sector and asset class diversification.

As China rolls out another round of regulatory tightening, global stock markets will be impacted and investors and must tread carefully to avoid unnecessary risks and to capitalize on the potential opportunities.