Stock market shares in Hong Kong plunged early Friday after China sought to enforce a new security policy on the $5 trillion financial hub following pro-democracy protests in 2019, risking a new wave of street rallies and further distorting the already worsening relations between Washington and Beijing.

News that China, for the first time, also lowered its yearly economic growth goal further fanned worries about the novel coronavirus pandemic's effects, lifting safe haven assets such as Treasuries and the US currency.

In a stock market sell-off, real estate developers and financials were some of the hardly-hit victims. Because of Covid-19, and with the economy already reeling from its negative effects, investors scampered for safety with many paranoid about the rising power of China in the semi-autonomous financial center and what that means for engaging in business in the city.

The Hang Seng closed down 5.5 percent on Friday, marking the worst single-day showing of the index in almost half a decade, on investor fears that China's aggressive display of legal power would rekindle mass demonstrations and add to the world's pain.

Real estate firms bore the burden of heavy selling, with a market gauge slumping the most since the global recession, in the face of worries Hong Kong's bleak future will prompt businessmen and its locals to move their investments overseas.

Of great doubt is whether Hong Kong can withstand the pressure to operate efficiently as a world financial capital once it passes new mandates that will collide with measures against Beijing's interests, like subversion and sedition.

The legislation was proposed in China on Friday during its annual National People's Congress, sparking calls in Hong Kong for fresh demonstrations to protect local freedoms. When asked about Beijing's surprise moves, United States President Donald Trump said his administration will respond very strongly.

Beijing's policymakers have rolled out a plan to impose new legislation to boost enforcement mechanisms in the finance center, which was jolted by many months of huge and sometimes violent pro-democracy rallies that dealt a heavy blow to the city's businesses last year.

The heavy selling shook most of Hong Kong's markets, with over two-thirds of the 50-member Hang Seng Index registering fresh four-week declines early Friday. The MSCI Hong Kong Index was poised for its steepest collapse since 2008. The index, which is comprised of two US-listed stocks, traded at its weakest level relative to MSCI's global gauge. In Japan, the Nikkei fel 0.25 percent while the Kospit of South Korea dropped 0.7 percent.

Speaking Friday during his annual report to the Chinese parliament, as per story by Aljazeera, Premier Li Keqiang disclosed that the government would establish a "sound legal system and enforcement mechanisms" to ensure national security in Hong Kong and Macau, China's other semi-autonomous city. According to Li, China will respect and impose the "one country, two systems" framework, the report said.

Meanwhile, the Hong Kong dollar was down for a second day after the currency floated near its strongest against the US dollar for two months. Indications of worries were evident in the options trading floor, with Hong Kong dollar derivatives volume reaching one point and exceeding those on the Japanese currency yen.