JPMorgan published a report stating that the risk-return profile of state-owned bank H shares is becoming unfavorable as the trade tensions between China and the United States escalate, and the macro environment becomes increasingly challenging. For instance, if China's policy reactions exceed expectations, A/H share state-owned banks may underperform growth-type companies; however, if the policy response is disappointing, the downside risk for H-share banks will be greater than for A-share banks. This is because, compared to regional peers, H-share banks lack attractive total return spreads, and the PBOC's swap tools provide downside support for the onshore market but have limited impact on the offshore market.

The bank downgraded the rating of Bank of China (03988.HK) H shares from "overweight" to "neutral" due to its potential greater involvement in cross-border trade financing, lowering its target price from 4 yuan to 3.7 yuan.

Additionally, the bank downgraded the rating of Bank of Communications (03328.HK) H shares from "neutral" to "shareholding," lowering the target price from 5.8 yuan to 5.3 yuan, as it has the lowest net interest margin among state-owned banks, and its deposit business is the weakest among state-owned banks. Therefore, in the event of further interest rate cuts by the PBOC and potential deposit outflows, Bank of Communications will be more susceptible to liquidity and interest rate management issues.