BlackRock Investment Institute downgraded China stocks to neutral from overweight following concerns over the real estate crisis and limited stimulus by the government.
In a report released on Monday, BlackRock strategists said ongoing structural challenges and geopolitical risks in China portend a worsening long-term growth outlook.
Just last week, the company's think tank expressed hope for China's stimulus measures, saying weak inflation could create room for more policy easing.
The company last downgraded China stocks in February to overweight saying there was a short-term chance for China's economy to rebound from the reopening of Covid-19 restrictions.
Even so, the performance of Chinese stocks has worsened since then, with the Hang Seng index plunging more than 20% from its January high and the MSCI China index losing 13%.
This follows the country's economy continuing to struggle with the risk of 'default' or debt default in the real estate market and a weak recovery in domestic consumption.
Although the government has announced various stimulus measures since July, the impact on the economy has been limited.
