JPMORGAN Chase & Co cut stock index targets for the Chinese mainland, India, Hong Kong, the Philippines and other markets in Asia as higher inflation prompts tightening of monetary policy.

The Hang Seng China Enterprises Index target was trimmed 16 percent to 18,500, India's Sensitive Index by 18 percent to 22,500, the Hang Seng Index by 10 percent to 35,000, and the Philippine Stock Exchange Index by 28 percent to 3,400, JPMorgan strategists including Adrian Mowat wrote in a report last week.

"Investors' focus needs to move to increasing policy risk as governments manage a poorer growth-inflation balance," the report said. "The downside risk is that higher inflation reduces domestic demand and investment, as disposable income and profit margins are squeezed."

Among Asian markets outside Japan, indexes apart from Australia, India, South Korea still forecast to generate a total US dollar return exceeding 20 percent, said JPMorgan, according to Bloomberg News.

The "upside risk" is that lower US interest rates combined with a flight of capital from US credit markets may boost Asian equity valuations.