Wall Street brokerages have turned more cautious on Chinese stocks as persistent deflationary pressures and geopolitical tensions cloud the outlook for earnings in the world’s second-largest equity market.

SINGAPORE (Reuters) -Hong Kong stocks are cheap but may miss out on the benefits of China's economic support, analysts at Goldman Sachs said, while Morgan Stanley warned tensions and tariffs could hurt,

The risk of the Trump administration imposing trade levies on global goods alongside growth challenges for China have prompted Morgan Stanley to reduce its stance on European equities to neutral. Its base-case scenario sees the MSCI Europe Index rising 6% from Monday’s level and,

Goldman Sachs and Morgan Stanley downgraded their forecasts for Hong Kong and Chinese stocks, citing economic concerns and potential political impacts. While bullish on mainland China, Goldman Sachs believes Hong Kong will see limited growth and recommends mainland investments due to lower global sensitivity.