Major financial institutions are becoming more cautious about Chinese stocks due to deflationary pressures and geopolitical tensions affecting earnings forecasts.

Morgan Stanley has downgraded its outlook on Chinese equities, expressing concerns about the market's performance. Similarly, Goldman Sachs Group Inc. has adjusted its index target for the MSCI China Index, reflecting a less favorable macroeconomic environment.

These adjustments indicate the increasing apprehension among major financial institutions regarding the stability and growth potential of the world's second-largest equity market.