Wall Street's major financial institutions have become more cautious about the Chinese stock market, mainly impacted by ongoing deflationary pressures and geopolitical tensions. Morgan Stanley has downgraded the rating of Chinese stocks to 'mild underweight', believing that the possibility of the Chinese government launching fiscal stimulus early next year for consumer and housing issues is very limited, as it worries about moral hazard and prematurely transforming into a welfare state. This will create stronger downside risks for corporate earnings and market valuations in the coming months, with a target of 63 for the msci chinese index by the end of next year, slightly lower than last Friday's (15th) closing of 63.93.

Goldman Sachs has also lowered the target for the msci chinese index from 84 to 75, but maintains an 'overweight' stance on Chinese stocks, while pointing out that potential tariffs from the USA on China could lead to slower profit growth. Additionally, Goldman Sachs has downgraded the rating of Hong Kong stocks to 'underweight' due to weakness in the local real estate and retail industries, as well as the low transmission of mainland stimulus policies.