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 amid escalating trade tensions between the two countries.

According to a Financial Times report, Chinese funds are pulling back from investing in funds of U.S. private equity firms and seeking exclusion from investments in U.S. companies made by private equity firms based elsewhere. This move comes as a response to pressure from the Chinese government and the ongoing trade war between the United States and China.

Blackstone, along with other major U.S. private equity firms such as Carlyle, Vista Equity Partners, and Thoma Bravo, has previously received backing from Chinese state-backed investors. The retreat of these investors could potentially impact Blackstone's fundraising capabilities and overall business outlook, contributing to the sharp decline in its stock price. As the situation continues to develop, investors will be closely monitoring the potential long-term implications for Blackstone and the broader private equity sector.