Wall Street brokerages have turned more cautious on Chinese stocks as persistent deflationary pressures and geopolitical tensions cloud the outlook for earnings in the world’s second-largest equity market.

SINGAPORE (Reuters) -Hong Kong stocks are cheap but may miss out on the benefits of China's economic support, analysts at Goldman Sachs said, while Morgan Stanley warned tensions and tariffs could hurt,

Goldman Sachs and Morgan Stanley downgraded their forecasts for Hong Kong and Chinese stocks, citing economic concerns and potential political impacts. While bullish on mainland China, Goldman Sachs believes Hong Kong will see limited growth and recommends mainland investments due to lower global sensitivity.

If Trump's proposed 60% tariff against China is enacted and the country responds aggressively, it could pressure some of America's largest companies.