J.P. Morgan is getting less optimistic about the trade conflict between the U.S. and China. The firm lowered its rating for Chinese equities to neutral from overweight, predicting the escalating trade war between the countries will affect China’s economy next year. As analyst, anticipate a negative 1 percentage point impact on China’s GDP growth from the latest announced tariffs, if no countermeasures is taken. As higher tariffs are squeezing Chinese manufacturing’s profit margin, reducing the investment incentive and hiring, which would then drag on consumption via reduced income. As a result, J.P. Morgan reduced its year-end price target for the MSCI China index to 85 from 95, representing 9 percent upside to Wednesday’s close. Read More: