Shares of major Hong Kong-listed insurance and financial institutions tumbled on Thursday, after reports surfaced that mainland Chinese authorities had begun taxing gains on offshore insurance policies bought by mainland visitors in the city, reviving fears of tighter curbs on cross-border capital flows.In early trading as of 9.45am, Prudential, whose Hong Kong hub was its biggest profit driver last year, fell 5.9 per cent, while pan-Asian life insurer AIA Group dropped 6.6 per cent. Major banking giants with significant wealth management arms also tracked lower, with HSBC Holdings losing 4.1 per cent and Standard Chartered trading down 3.4 per cent.The sell-off was triggered by a report from domestic financial media outlet Caixin saying that Chinese tax officials in cities like Beijing and Hangzhou had begun imposing a 20 per cent levy on income from Hong Kong insurance products, including dividend distributions and interest on prepaid premiums.The tax enforcement is the latest step in an effort by Beijing to maintain control over the insurance and cross-border wealth management sectors, as authorities move to close long-standing regulatory loopholes, curb capital flight and retain domestic savings.Analysts noted that while no formal policy announcement had been released, the tax enforcement threatened to erode the competitive yield advantages that Hong Kong insurance products held over mainland alternatives.In a research note on Thursday, Goldman Sachs analysts observed that while implementation details remain unconfirmed, the issue is “likely to remain a near-term share price overhang until there is greater clarity on regulatory implementation and sales trends”.