What happened 

Shares of Chinese companies took a beating today as political and economic changes in the country came into focus for investors. For gambling and travel companies operating in Macao, a special administrative region of China, the changes might be even more stark. 

Shares of MGM Resorts International (MGM -1.86%) fell as much as 2.7%, Melco Resorts & Entertainment (MLCO -3.01%) plunged up to 18.9%, and Chinese travel company Trip.com (TCOM -0.93%) fell 19.6%. Shares of the three stocks were flat, down 12.1%, and off 16.2%, respectively, at 2:30 p.m. ET on Monday.

So what 

The big news of the day was from China, where President Xi Jinping is heading for another five-year term. Xi has consolidated control over the Chinese Communist Party and laid the groundwork for long-term power. 

It's not clear exactly what the impact of Xi's growing power will be, but the last three years could be telling. China took a zero-COVID policy extremely seriously, and businesses both within and outside China have felt that impact. If strict policies like that continue, it will be harder for foreign companies to do business in China. 

Another reason travel stocks are down is the Chinese yuan's decline to a 14-year low and fear about the economy. China released a GDP report showing a 3.9% increase in economic activity in the third quarter, up from 0.4% growth in the second quarter, but that's well below its traditional growth levels. 

Gambling companies could feel the biggest impact of political changes in China. Macao -- where Melco and MGM Resorts have casinos -- is semi-independent, but it's also reliant on China for most of its revenue. Gambling is illegal in China, which is a big reason for so much of Macao's success, but that could be changed with little warning by Xi. Higher risks mean lower valuations for investors, and that's what we're seeing today. 

Now what 

After decades of friendly policies for foreign companies and investors, we have likely seen a reversal in fortunes for U.S. investors. As Xi's power has grown, we have seen Chinese tech leaders and foreign trade partners take the brunt of changing policies. There's no certainty that a region like Macao will ultimately come under pressure directly from Xi, but the risk seems higher now than ever before. That's a big reason for this sell-off. 

It's less clear exactly what's going on with China's economy. There have been reports of pressure as the U.S. brings China's chip industry to a halt after barring export of certain chip technologies to China, and the GDP data is extremely opaque. So there could be growing worry that an economic downturn is on the way, exposing risks built into the financial industry. 

This is definitely risk-off trading today with all China-related companies dropping sharply. There's fear in the air, and I'm not sure the sentiment will change anytime soon.