China’s stock-market decline is unfolding alongside deteriorating corporate profits, complicating the argument that lower share prices alone offer a buying opportunity. Investors face an uncomfortable combination: economic conditions are undermining earnings, but the weakness has not been sufficient to prompt forceful additional stimulus. That leaves investors confronting both earnings pressure and the absence of forceful new support. The scale of the losses already incurred does not, by itself, establish a basis for a sustained recovery.

The value erased from Chinese equities since their May peak stands at $3.5 trillion, according to compiled market data. Selling accelerated last week, taking the mainland’s benchmark CSI 300 Index into bear-market territory. In Hong Kong, a technology-sector index approached the point of surrendering its entire advance since Beijing introduced a broad package of measures to support growth two years ago. Together, those developments show the pressure extending across different parts of the world’s second-largest equity market.

The policy package provides an important reference point for the current retreat. The Hong Kong technology gauge is approaching, rather than reported to have reached, the point of losing all its gains since those measures. The distinction matters: that gauge is nearing a reversal of that rise, rather than having conclusively completed one. Its remaining gains do not, by themselves, establish an improvement in corporate earnings.

Read more: Japanese life insurers are net buyers of superlong government bonds for four months

The difficulty for buyers is that a lower share price does not, by itself, establish better value. If the profits supporting that price are also falling, the apparent discount may be less attractive than it looks. The earnings backdrop therefore complicates the interpretation of the selloff. Rather than necessarily offering unchanged corporate prospects at a reduced price, the decline is occurring alongside pressure on those prospects.

The $3.5 trillion loss measures the reduction in equity-market value, not the size of the decline in company profits. It establishes the scale of the market retreat without settling whether shares have become inexpensive relative to earnings. That distinction is particularly important when profits are sinking. A large loss of market value may invite arguments for a rebound, but the amount already erased cannot establish where prices should settle or when selling pressure will ease.

The economic backdrop also complicates expectations for policy support. Weakness that damages profits can make additional stimulus more appealing to investors, yet it does not necessarily produce a forceful response. China’s present difficulty lies in that gap. The economy is weak enough to hurt corporate performance without having triggered forceful new stimulus. Expectations of official support therefore cannot be treated as equivalent to measures already announced, or as evidence that earnings have improved.

Read more: France’s 10-year bond yield tops 5% ahead of expected ECB hold

Arguments for buying or remaining cautious depend on more than whether the decline has been substantial. A case for buying could be stronger if profits stabilised or additional policy support improved the outlook. A reason for caution is that neither outcome can be assumed merely because shares have fallen sharply. These are different ways of assessing the same weakness: one looks for conditions that could support a recovery, while the other gives greater weight to the deterioration already evident.

The mainland and Hong Kong benchmarks also describe different aspects of the retreat. The CSI 300’s move into a bear market marks a further stage in the onshore decline. The technology gauge’s position shows how close that segment is to relinquishing the gains recorded since Beijing’s growth package. Neither benchmark, however, provides an answer to the earnings problem. Their movements document weakening market performance; they do not demonstrate that the pressures on corporate profits have run their course.

For investors considering whether to buy into the fall, an important distinction is between a price that has declined and an earnings outlook that has stopped worsening. Those conditions need not arrive together. A recovery argument based chiefly on the distance from May’s peak leaves an earnings question unresolved: whether companies can sustain the profits on which valuations depend. Equally, an argument based on forceful new stimulus remains conditional while economic weakness has yet to trigger such a response.

One question for the outlook is whether the balance between earnings weakness and policy support changes. Stabilising profits could strengthen the basis for assessing lower prices as an opportunity, while stronger growth measures could alter expectations about the economy. Continued deterioration could make that assessment harder. For now, the selloff establishes the scale of the reduction in equity-market value, but that figure alone does not establish a reason for recovery.