China has become a losing proposition for Wall Street firms, forcing a reassessment of their investment-banking prospects in Hong Kong.

American and European investment banks prospered in the Asian financial hub over the past decade by helping hundreds of Chinese companies raise money from international stock and bond sales. They also profited from advising on cross-border acquisitions and investments during China’s prepandemic economic boom. The money train made Wall Street an advocate of engagement with China, even as political tensions grew between Washington and Beijing.