Shares of Chinese companies listed in the U.S. dropped sharply Monday after Beijing tightened President Xi Jinping's grip on power, souring investor sentiment for non-state-driven companies.

The Invesco Golden Dragon China ETF, which tracks the Nasdaq Goldman Dragon China Index, plunged 20% to hit a new 52-week low. The index holds 65 companies whose common stocks are publicly traded in the U.S. and the majority of whose business is conducted within the People's Republic of China.

Tech giant Alibaba lost more than 19%, while Tencent Music Entertainment fell 17%. Another tech name Pinduoduo plunged a whopping 32.5% Monday.

The moves come after Xi paved the way for an unprecedented third term as leader and packed the Politburo standing committee, the core circle of power in the ruling Communist Party of China, with loyalists.

Under Xi's leadership, China has implemented a raft of policy that has tightened regulation on the tech sector in areas from data protection to governing the way in which algorithms can be used.

Meanwhile, Xi has stuck to the strict "zero-Covid" policy which has seen cities, including the mega financial hub of Shanghai, locked down this year, even as most of the world has opened their economies.

"Stocks based in the world';s second largest economy are 'uninvestable'; again," Bernstein sales trading desk's Mark Schilsky said in a note Monday.

Hong Kong's Hang Seng index spiraled 6.36% to its lowest levels since April 2009. The Shanghai Composite and the Shenzhen Component in mainland China both lost about 2%.

— CNBC's Arjun Kharpal contributed reporting.