HONG KONG -- Chinese stocks closed near their lowest level in more than two-and-a-half years on Wednesday, victims of worries over the U.S.-China trade war, slower economic growth and weak investor sentiment.

The Shanghai stock market closed a hair above its 2016 low, with the Shanghai Composite Index ending the day at 2,656.11, down 0.3%, less than a point from its closing level of 2,655.66 on Jan. 28, 2016.

In Hong Kong, stocks moved deeper into bear market territory, down more than 20% since hitting an all-time high earlier this year, with the Hang Seng Index closing 0.3% lower at 26,345.04. "Investors are very cautious in the trade war environment," Stanley Chan, research director at Emperor Securities, told Nikkei Markets. "The depressed market conditions are likely to stay for a period before a rebound," he said.

Asian stocks have been battered in recent weeks, dragged lower by currency crises in Argentina and Turkey that have hit other emerging markets over concerns of global financial contagion and the ongoing trade dispute. Most other major markets in Asia closed lower on Wednesday. Japan's Nikkei index and Taiwan's Taiex index each shed 0.3%, and Seoul was down fractionally.

Benchmark indexes in Indonesia, Malaysia and the Philippines all declined, while Singapore bucked the trend, closing up 0.5%. In India, shares rebounded 0.8%, a day after ending at near six-week lows.

"The growing fears of an all-out tit-for-tat trade war between the world's two largest economies are likely to fuel risk aversion, ultimately punishing global stocks and emerging markets," Lukman Otunuga, an analyst at foreign-exchange broker ForexTime, said in a report this week. "Focusing on emerging markets, weakness is set to remain a recurring theme amid global trade tensions, a broadly stronger dollar and prospects of higher U.S. interest rates," he said.

Analysts say that China is somewhat removed from global contagion because it does not depend on foreign capital for its economic growth. "In terms of stability, in terms of ability to fend off external pressure, I think China still is rather unique of all the emerging-market countries," Jing Ulrich, managing director and vice chairman of Asia-Pacific at JPMorgan Chase, said at a press briefing last week.

The Shanghai stock market has fallen 20% since the beginning of the year and is down 49% from its 2015 peak before the market sell-off that summer. Bloomberg recently reported that "state-backed funds" have been buying shares in an effort to support the market.

In a report last week, Goldman Sachs said that a "national team," which it defines as "government-related entities that were formed during the 2015 market turmoil and those that may be subject to state influences," has been active in supporting the market, with equity holdings totaling 1.5 trillion yuan ($218.3 billion) in the second quarter.

Some market watchers said that stock-price valuations in China are beginning to look attractive. "The current valuation for Shanghai's market offers a good opportunity for long-term money to enter, though in the near-term the sentiments are still weighted down by trade war concerns" and other issues, said Steven Yang, head of China A- and H-share strategy and products at CLSA.

But economic concerns continue to hang over the market.

Chang Liu, China economist at Capital Economics in London, said he expects China's economy to slow over the coming quarters. "The trade dispute with the U.S. is a headwind, though a small one at present, with the direct hit to exports from the tariffs announced so far likely to be small," he said, adding that a "further escalation of the conflict would be a greater worry." The primary challenge to the economy is the "ongoing slowdown in credit growth, which is already feeding through to a weakening in economic activity," he said.

Liu said there has been a shift in policy by Chinese leaders, noting that the People's Bank of China, the central bank, has "in recent weeks guided market interest rates lower" after keeping monetary policy tight since late 2016. "Fiscal policy is being loosened, too," he said, adding that he expects to see "further easing" in the coming months.

"It is worth noting that we are predicting a cyclical slowdown rather than a 'hard landing' for China," Liu said. "The biggest risk to the outlook is if the trade tensions between the U.S. and China continue to escalate. If this happened, we would expect to see more aggressive easing from policymakers."