Stocks in Hong Kong entered a bear market on Friday, down 21 percent from their high near the start of the year, as investors grew increasingly worried that the deteriorating condition of China’s real estate sector could spill over into the broader economy.

The slump in the Hang Seng Index, which is made up mostly of companies from the mainland, comes as China’s economy confronts weakening growth. After three years of harsh Covid restrictions, foreign investment is down, consumers are spending less and the housing market is in turmoil.

The Hang Seng fell just over 2 percent on Friday, and about 6 percent for the week. The index is down more than 10 percent so far this month.

Bear markets, when stocks drop at least 20 percent from their most recent peak, are a relatively rare signal that investors view the economy with serious pessimism.

A real estate crisis is at the heart of the concerns over China. Among the companies hit hardest recently is the Chinese real estate giant Country Garden, whose shares are trading well below one Hong Kong dollar. Another behemoth property developer, China Evergrande, sought bankruptcy protection in the United States on Thursday as it struggled to settle with creditors over tens of billions of dollars in debt.

Chinese stocks bounced after officials in December lifted the government’s extreme “zero Covid” measures that sharply curtailed economic activity. But hopes that China’s economy would show a sustained recovery faded as the country released a string of concerning economic statistics. Prices fell, raising the threat of deflation; retail sales and industrial production missed economists’ expectations; and real estate investments dwindled.

Exports, a cornerstone of China’s economy, have fallen. China’s currency, the renminbi, has sunk to its lowest level in years. A number of major banks have downgraded their forecasts for how much China’s economy will grow in 2023, to levels below the government’s target of about 5 percent. The most recent official numbers indicate that China was growing at an annual growth rate of about 3 percent.

China’s policymakers have responded with a series of measures aimed at encouraging consumers to spend more and banks to step up their lending. The central bank, the People’s Bank of China, has cut key interest rates to new lows. But the moves have done little to boost the confidence of investors or generate greater economy activity.

One problem weighing heavily on China is debt, particularly at local governments that depend greatly on the real estate market. Overall debt in China is now larger, relative to national economic output, than in the United States.

And so the stock market has lost steam. In Hong Kong, stocks have declined for six consecutive days, and eight of the past 10 trading sessions.

Stocks have also tumbled in mainland China. The CSI 300 index, which tracks the biggest companies listed in Shanghai and Shenzhen, has dropped about 10 percent since its January high.