Investing.com-- Investor sentiment in China’s A-share market has weakened as trading volume declines, according to a research note from Morgan Stanley analysts.

The U.S. investment bank said lower market turnover reflects cautious investor sentiment amid economic uncertainties.

While key indexes have stabilized after recent volatility, a lack of strong buying interest suggests that traders remain on the sidelines, analysts said.

Morgan Stanley analysts noted that liquidity in the market has fallen, with daily trading volume decreasing compared to previous months. The decline in investor participation comes despite government efforts to boost confidence in China’s stock market.

They added that while some sectors remain resilient, overall enthusiasm has waned.

Analysts pointed to macroeconomic factors, such as concerns over economic recovery and corporate earnings, as reasons behind the cautious mood. The bank expects sentiment to improve if stronger policy support or earnings growth emerges in the coming months.

China’s stock market has faced volatility in recent months, with authorities introducing measures to stabilize markets.

However, analysts believe that sustained improvement in trading sentiment will require a clearer outlook on economic growth and policy direction.