(Bloomberg) — Chinese stocks tumbled as doubts resurfaced on whether Beijing’s stimulus blitz will be enough to prop up an economy mired in deflation and a property crisis.

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The CSI 300 Index fell 2.7%, extending losses since an Oct. 8 high to more than 9%. A gauge of Chinese shares listed in Hong Kong slumped 4%, capping its worst day in a week. The yuan also weakened.

Volatility has gripped the market in recent sessions as investors debate the sustainability of the rebound that began late last month, with the lack of clarity over the size of Beijing’s planned fiscal boost weighing on sentiment. Weak recent economic data, including figures on inflation and trade, have underscored the need for more stimulus.

There are concerns that “any stimulus might be more focused on risk mitigation, especially about local government debt, rather than growth,” said Xin-Yao Ng, investment manager of Asian equities at abrdn Asia Ltd. “Investors definitely prefer a bazooka to reflate the economy quickly.”

Tuesday’s price action suggests that investors were unimpressed by a Caixin report that said China may raise 6 trillion yuan ($846 billion) from ultra-long special government bonds over three years. Bloomberg later reported that local authorities will be issuing the notes mainly to refinance their off-balance-sheet debt.

Following the central bank’s easing steps in late September, investors have been clamoring for the government to bolster fiscal spending. Officials promised new measures to support the property sector and hinted at greater government borrowing at a weekend briefing, without giving an amount.

There’s concern “that the stimulus announced so far just isn’t enough,” said Nathan Thooft, chief investment officer and senior portfolio manager at Manulife Investment Management. “We put on a tactical overweight to Chinese equities. We are not necessarily believers that this is a structural shift.”

The yuan slid as much as 0.6% to 7.1343 per dollar in the offshore market, the weakest level in about a month. The so-called China proxies in Asia — currencies that are affected by investor confidence on the country — also dropped.

The Hang Seng China Enterprises Index, which comprises Chinese shares listed in Hong Kong, is now down more than 12% since Oct. 7.

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Growing Divide

As the rally falters, a divide is growing among global investors.

Morgan Stanley Wealth Management warned that investors should steer clear of soaring Chinese equities as the stimulus measures won’t be enough to repair the struggling economy. Wells Fargo Investment Institute is also skeptical that the rebound will last given the depressed sentiment surrounding China’s consumers.

UBS Group AG still sees value, saying heightened retail investor interest should give stocks further upward momentum.

China’s export growth slowed more than expected in September, curbing a trade rebound that has been a bright spot for a weakening economy. Loan expansion also disappointed in a sign of still weak domestic demand.

“China’s signal on policy stimulus prompted us to go modestly overweight, especially given depressed valuations,” strategists at BlackRock Investment Institute including Wei Li wrote in a note. “Details have been scant, so we could change our view if future announcements disappoint.”

–With assistance from Sujata Rao and Tian Chen.

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