Taiwan’s military has fired warning shots at a Chinese drone that buzzed over a Taiwanese-controlled island off China’s coast, raising tensions in the region.

“Investors are worried that regional conflict will escalate,” said Bo Pei, an analyst at US Tiger Securities.

Meanwhile, US regulators have ordered an audit of e-commerce giant Alibaba Group Holding Ltd and other US-listed Chinese companies starting next month, three sources familiar with the matter told Reuters.

The move by regulators follows an audit agreement between Beijing and Washington on Friday that allows US agencies to audit audit firms in China and Hong Kong.

“All the pre-trial jitters I see right now (affecting stocks),” said Thomas Hayes, president of Great Hill Capital.

Shares of Alibaba Group Holding Ltd fell nearly 3%, while search engine giant Baidu Inc traded 7% below market price gains. JD.com and Pinduoduo fell about 2%, while online entertainment company iQIYI fell 8.9%.