Shares of Trip.com Group Limited, the Chinese online travel services company, plummeted by nearly 8% on Monday, October 15th, amid broader concerns raised by Morgan Stanley over the challenges facing China's internet sector.

In a research report, Morgan Stanley stated that China's debt, demographics, and deflation will continue to pose significant challenges, potentially leading to a "debt-deflation loop" if the consumption stimulus fails to meet expectations. The investment bank cited failed expectations from recent government meetings, further reinforcing its cautious view on the sector.

While Morgan Stanley maintained an Overweight rating on Trip.com, citing its structural tailwinds and potential for growth on consumption recovery, the overall cautious outlook for China's internet valuations weighed heavily on the stock. The bank noted that it will take time for supportive policies to translate into consumer and corporate confidence, creating uncertainty surrounding near-term earnings forecasts for internet companies.