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US investors could be forced to divest around $800 billion in Chinese stocks if financial separation between the US and China occurs, according to Goldman Sachs estimates. Currently, US institutions hold about 7% of the market capitalization of American Depositary Receipts (ADRs) for Chinese companies, which may restrict their ability to trade in Hong Kong if firms like Alibaba face delisting.
Goldman Sachs, along with other global banks, is evaluating potential worst-case scenarios amid rising concerns over US-China financial disconnection. The possibility of American exchanges delisting Chinese firms, initially highlighted during Donald Trump’s presidency, has gained attention again after Treasury Secretary Scott Bessent stated that all options are “on the table” in trade talks with China.
Analysts noted the unprecedented uncertainty in global trade, leading to significant market volatility and recession fears. They predict that forced delistings could cause a 9% drop in ADR valuations and a 4% decline in the MSCI China Index.
Currently, US institutional investors hold $250 billion in Chinese ADRs, representing 26% of the total market value. Some funds, like the Kraneshares CSI China Internet Fund, face considerable risks, with 33% of its assets in ADRs—half of which lack a backup listing in Hong Kong. With 72% of its ownership tied to US investors, any delisting could trigger a major selloff, with JPMorgan estimating passive outflows from index removals could reach $11 billion. The risk of decoupling is now a pressing reality for portfolio managers.
(Newsroom staff only edited this story for style from a syndicated feed)
