The iShares China Large-Cap ETF (FXI) plunged 5.02% in pre-market trading on Tuesday, following a broader selloff in Chinese stocks and technology-related companies. The decline comes amid growing concerns over China's regulatory crackdown on tech giants and uncertainty surrounding the country's economic prospects.

One major factor contributing to the selloff is the investigation launched by China's market regulator into Nvidia, the AI chipmaker, over suspected violations of the country's anti-monopoly law. Nvidia's stock dropped 2.6% on Monday, weighing on the broader tech sector. Additionally, chipmaker AMD saw its shares fall 5.6% after being downgraded by Bank of America, citing downside risks for the company in 2025.

Furthermore, the decline in the FXI ETF reflects broader concerns about the Chinese economy and the potential impact of slowing growth on various sectors. Recent comments from top leaders in Beijing signaling stronger economic support next year have fueled speculation and options trading activity in China-focused ETFs, such as the Direxion Daily FTSE China Bull 3X Shares (YINN) and the Direxion Daily CSI 300 China A Share Bull 2X Shares (CHAU).