(Bloomberg) -- Chinese stocks have been notably calm during the recent bout of global market volatility, as investors opt to stay on the sidelines until there is clarity on tariffs and domestic stimulus.

The CSI 300 Index has moved less than 0.5% in half of the sessions over the past month. Turnover has drifted lower as traders avoided building leveraged positions. With the broader stock market lacking direction, investors are flocking to either safer fixed-income products or riskier small-cap stocks to boost returns.

“Market direction is uncertain because there’s a lack of good news, though there’s also no major negative catalyst” after the US-China tariff truce, said Xin-Yao Ng, investment director at Aberdeen Investments. “I find it hard to grasp the direction on beta currently, but there are still some good stock picking opportunities.”

While the market’s stability may be a sign of resilience, it more likely reflects waning enthusiasm for Chinese stocks as economic headwinds build. US tariffs on Chinese goods can shoot up again once the 90-day negotiation window ends in August. Beijing has taken a piecemeal approach to stimulus this year, disappointing investors who had been anticipating stronger policy support for the economy.

Here are some indicators that show cooling trading sentiment.

Price swings have eased to levels last seen before the People’s Bank of China reignited animal spirits with its stimulus blitz in September. The CSI 300 Index’s 30-day volatility is hovering at around eight points, the lowest since July 2024. For the market to break such tranquility, traders say Beijing needs to implement deeper structural reforms and make breakthroughs on trade talks.

“I would focus on income growth and employment, without that the consumption story cannot return,” said Sat Duhra, a portfolio manager at Janus Henderson Investors, adding that there is a limit on the impact of stimulus. “A resolution to the trade talks will drive more positive sentiment but it will be short-lived, and that doesn’t address the structural challenges facing China.”

Leveraged equity positions in China have stagnated since April. Outstanding margin debt balances on mainland exchanges are hovering around 1.8 trillion yuan ($250 billion), down nearly 8% from a March high. While equity benchmarks initially rallied following a temporary US-China tariff truce, subsequent losses have pared the CSI 300’s gain for the month to under 2%.

Part of the reason for the listless trading can be subdued activity from the so-called “National Team” funds after record purchases last month.

The squad has been largely dormant since late April, with inflows into a group of exchange-traded funds known to be favored by the team slowing to a trickle, or even turning to outflows, according to data compiled by Bloomberg. Meanwhile, aggregate flows into all equity-focused ETFs in China have been negative for five straight weeks.

While enthusiasm toward stocks has cooled, fixed-income ETFs have become all the rage. The turnover across a basket of 30 such products hit a record 90 billion yuan this month, accounting for an unprecedented 8.2% of all trading value in Shanghai and Shenzhen.

The last time the ratio reached 8% was in August 2024, when stocks were still in the doldrums. These risk-adverse products have consistently ranked as the most actively-traded securities in Shanghai and Shenzhen over the past two weeks, according to Bloomberg-compiled data.

A lack of clear direction has pushed some investors into more riskier corners of the market. Trading in the smallcap CSI 2000 Index accounted for more than a third of the total turnover on the mainland on Tuesday.

The CSI 2000 gauge has gained nearly 9% this year through Tuesday, compared to the CSI 300’s 2.4% drop. The surge in interest toward volatile smallcaps suggests a lack of sustainable themes to chase in the stock market.