If you thought last month's rout for Chinese technology stocks like Alibaba (BABA 0.57%) and Tencent Holdings (TCEHY 0.33%) was bad, look a little further down the market cap scale. It gets even worse. Other Nasdaq-listed peers like Trip.com (TRIP 0.68%) and Bilibili (BILI 1.46%) lost a respective 27% and 30% of their value in July versus the Nasdaq Composite's slight gain.

An opportunity? It's never wrong to scrutinize a heavily sold-off ticker as a prospective purchase; why pay more for a good stock when you can pay less?

Simply because a stock has lost a great deal of value, however, doesn't inherently bolster its bullish case right now. There may be more value at risk. This certainly seems to be the case with some of the Nasdaq's top large-cap losers last month, which all fell for the same underlying reason that's yet to fully play out.

Up-ended by unexpected regulation

Chinese regulators have been busy of late. New rules touching on areas from antitrust to data security to work hours to pre-IPO disclosures have been established just within the past few months. Just when it looks like this wave of new restrictions is about to ease up, it appears to accelerate.

The impact has been sweeping, but particularly problematic for certain tech companies based in China last month.

In addition to the aforementioned drubbings for names like Trip.com and Alibaba, lesser-known players like Pinduoduo (PDD 2.56%), GDS Holdings (GDS -0.90%), and Futu (FUTU 1.14%) have also been hit hard. Shares of e-commerce outfit Pinduoduo fell 28% last month, while online broker Futu saw its stock tumble to the tune of 43%. Data center operator GDS Holdings ended July down 25%, not so much for any company-specific reason, but rather simply because the foreseeable future looks more challenging for the tech industry than the recent past has been.

^IXIC Chart

^IXIC data by YCharts

And there's the rub for investors mulling the purchase of any of these beaten-down names, by the way. Were there an internal means of adapting to a situation or a foreseeable end to a cyclical headwind, the prospective reward would justify the risk of owning one (or more) of these stocks. In that China's regulatory agencies continue to think up new ways of clamping down on its corporations, though, there's no telling when this effort will abate, or what the environment will look like once it finally does.

It's the sort of uncertainty that makes it impossible to meaningfully handicap a stock's true risk-adjusted potential.

Until further notice

This hasn't prevented at least some investors from taking a shot on these up-ended tickers, of course.

Numbers revealed in a recent CNBC interview with Emerging Portfolio Fund Research's director of research Cameron Brandt indicate $3.6 billion was invested back into China-focused funds last week, with $300 million of that specifically invested in Chinese technology stock funds. Other analysts are quick to point out that even with its woes, the long-term China growth story remains a compelling one.

Man stopping a falling chart from falling any farther.

Image source: Getty Images.

This is a situation, however, where investors would be wise to hold their finger in the air and take the market's proverbial temperature. That is to say, smart investors are trying to figure out if Chinese regulators are ready to back off, or if they've still got a point to make.

To this end, China's government just made this task a much easier one to complete.

On Tuesday, China's state-owned newspaper Economic Information Daily posted an online article referring to video gaming -- a business that regulators hadn't directly put in its crosshairs -- as "spiritual opium." The commentary appeared to be aimed at Tencent. The article was removed for a while and then reposted with much of the damning language removed. The original post, however, still may well capture the true spirit of how China's government is seeing not just the video gaming business, but many of its internet companies. It's not the sort of stance that simply fades overnight.

So, no, last month's Nasdaq-listed losers like Futu, Bilibili, and Pinduoduo aren't buys here. They're all simply too caught up in a secular headwind that could persist indefinitely, and drive unforeseeable changes to their respective marketplace rules. This lack of clarity only works against stocks, and by extension, against investors.