LONDON, Sept 5 (Reuters) - JPMorgan has ditched its buy

recommendation on Chinese stocks, warning of the risk of a

second tariff war after November's U.S. election and citing

worries about the country's growth.

The bank downgraded China to "neutral" from "overweight" in

a note on Wednesday and recommended investors add to bets on

countries such as India, Mexico and Saudi Arabia instead.

WHY IT'S IMPORTANT

China's economy is stumbling - by its standards - and the

country is struggling to attract global investors, who have

moved heavily into other emerging markets such as India.

KEY QUOTE

"China equities could see heightened volatility around the

upcoming U.S. elections," JPMorgan analysts, including Pedro

Martins, said in the note.

"The impact of a potential 'Tariff War 2.0' (with tariffs

increasing from 20% to 60%) could be more significant than the

first tariff war."

CONTEXT

China's CSI 300 stock index has fallen more than

40% since hitting a record high in 2021, with the country

increasingly in economic conflict with the United States and

suffering from a property crisis.

Survey data over the weekend showed China's manufacturing

activity sank to a six-month low in August. And

weaker-than-expected second-quarter growth called into question

China's ability to hit its 5% GDP target this year.

BY THE NUMBERS

JPMorgan said U.S. tariffs of 60% on Chinese products, as

Republican presidential candidate Donald Trump has suggested,

may reduce China's GDP growth by two percentage points from its

current forecast of 4% year-on-year in 2025, excluding any

policy responses.

The bank said it now expects full-year growth in 2024 to

come in at 4.6%, below the 5% target.

WHAT'S NEXT

Investors will scrutinise Chinese economic data and hope for

a bigger stimulus response from Beijing than the existing

reductions to borrowing rates. Inflation and trade balance

figures are due next week.

GRAPHIC