Morgan Stanley is advising investors against buying the dip in Chinese stocks, warning that foreign funds may keep selling unless there is further policy easing and sentiment is likely to remain fragile.

Foreign investors’ outflow from the so-called A-share market has entered “an unprecedented stage,” Morgan Stanley strategists including Laura Wang wrote in a note, stating that the cumulative outflow of $22.1 billion from Aug. 7 to Oct. 19 is the largest in Stock Connect’s history. The Stock Connect refers to trading links between China and Hong Kong.

Global funds have been dumping Chinese shares amid rising geopolitical tensions, economic headwinds and an ongoing housing crisis. Efforts by President Xi Jinping’s government to stabilize the property sector and avert deflation have shown little effect.

Morgan Stanley had warned in late July following positive signals from the Poliburo meeting that a follow-through of measures would be required to sustain a recovery in sentiment. They also expressed hesitation to pivot to a more bullish tone after a package of market policy measures.

Overseas investors are on track for a third straight month of selling stocks in Shanghai and Shenzhen — the longest streak — after recording the biggest single day outflow in two months on Thursday.

Chinese stocks dipped below a major psychological level on Friday and the Shanghai Composite Index is poised for its worst week of the year. Foreign investors are now less than 70 billion yuan ($9.6 billion) away from making 2023 the first year they sell Chinese shares on a net basis since trading links opened in late 2016.

Investors need to watch for a fundamental improvement in China’s macro economy and government stimulus measures to restore investor confidence, Morgan Stanley said. Events including the politburo meeting and Third Plenum, and a potential meeting between US President Joe Biden and President Xi Jinping at the APEC Summit next month could be key.