Blackstone Group LP (BX) saw its stock price plummet by 5.09% in pre-market trading on Monday, following reports that Chinese state-backed funds are retreating from investments in U.S.-headquartered private capital firms. This move comes amid escalating trade tensions between the United States and China.

According to a Financial Times report, Chinese funds are not only pulling back from new investments but are also seeking to be excluded from investments in U.S. companies made by private equity firms based elsewhere. Blackstone, along with other major U.S. firms such as Carlyle, Vista Equity Partners, and Thoma Bravo, has previously received backing from Chinese state-backed investors.

The retreat is reportedly a response to pressure from the Chinese government, as trade relations between the two economic superpowers continue to deteriorate. With the U.S. imposing 145% tariffs on Chinese goods and China retaliating with 125% levies on American products, the impact is now spilling over into the private equity sector. This development could potentially affect Blackstone's ability to raise capital and pursue investment opportunities, contributing to the sharp decline in its stock price.