Stocks in Hong Kong fell Tuesday, with investment from the mainland quickly cooling after an eight-day winning streak.

The Hang Seng Index was down the most in Asia, falling 1% to 27729.67, with buying through a trading link with Shanghai plunging.

Tencent Holdings Ltd., whose shares fell 5%, led the losses on the Hang Seng early Tuesday. Stocks of the operator of the Hong Kong Stock Exchange, Hong Kong Exchanges & Clearing Ltd., were down 1.8% after jumping 19% Monday.

Mainland investors bought a net 2.4 billion yuan on Monday through the Shanghai-Hong Kong Stock Connect and 5.4 billion last Friday, after hitting the 10.5 billion yuan daily quota on both Wednesday and Thursday. The plunge underscores a newly volatile trading environment for global investors who now face the prospect of mainland investors coming into the market with a different strategy, often more speculative and momentum driven.

While investors expect a flood of money from the mainland to buoy Hong Kong’s market in the coming months–mutual funds there need time to set up to use the stock connect scheme–many have sounded caution toward the sudden rise that put the Hang Seng up 14% in eight days to above 28000 for the first time on Monday in more than seven years.

“This happened so fast. We’re still gauging some of the latest developments,” said Sherwood Zhang, who manages Matthews Asia’s China dividends strategy. “We haven’t been chasing any of the gains…this environment makes stock-picking more important.”

Mr. Zhang said small caps in Hong Kong, which mainland investors have bid up in particular, will still sell off if firms miss earnings or show poor corporate governance and financial distress. “There’s still a lot of buying from Hong Kong and international investors” in this market, and “I don’t think [they] will tolerate those problems,” he said.

Stocks in Japan were also cooling with the Nikkei Stock Average flat at 19896.94 and volumes low. The market has yet to close above 20000.

“Investors are keen to avoid buying too much and taking risk before U.S. earnings validate pessimism that the U.S. stock prices may have topped out for this cycle,” said Yoshihiro Okumura, general manager at Chibagin Asset Management. “On the other hand, the downside continues to look pretty firm as shorting the market has proven to be a fool’s game since the last round of Bank of Japan easing [on October 31].”