$800 billion at risk as US-China tensions escalate, says Goldman

Renewed US-China trade tensions and regulatory pressures have reignited delisting concerns for Chinese firms on American exchanges, following Treasury Secretary Scott Bessent’s statement that “all options” remain on the table in trade negotiations

In a striking new forecast, Goldman Sachs has warned that US investors could be forced to divest as much as $800 billion in Chinese equities if financial ties between the United States and China continue to deteriorate. The projection reflects growing unease among global investors as the idea of a complete financial separation between the two nations shifts from speculation to plausible scenario.

Goldman’s analysts, in a recent note, emphasized that around 7% of the market capitalization of Chinese companies’ American Depositary Receipts (ADRs) is held by US institutions. However, many of these investors may not have the infrastructure or regulatory clearance to trade on Hong Kong exchanges—posing a significant risk if major Chinese firms, such as Alibaba, are forced to exit US markets.

Rising delisting risks amid geopolitical strains

The outlook for US-listed Chinese firms has been complicated by renewed trade tensions and regulatory pressures. Concerns about the delisting of Chinese companies from American exchanges—first raised during the Trump administration—have resurfaced following remarks by Treasury Secretary Scott Bessent, who noted that the US is considering “all options” in trade negotiations with China.

If Chinese firms are forced off US exchanges, Goldman anticipates a sharp market response. Valuations of Chinese ADRs could decline by up to 9%, while the broader MSCI China Index may see a 4% correction. On the other side, Chinese investors holding US financial assets might offload an estimated $1.7 trillion, including $370 billion in equities and $1.3 trillion in bonds.

Potential fallout for American investors

According to Goldman Sachs, US institutional investors currently hold about $250 billion in Chinese ADRs and roughly $522 billion in Hong Kong-listed stocks. While liquidation of Chinese A shares could be completed in a single trading day, the firm estimates it could take close to 100 days to unwind positions in ADRs or Hong Kong equities due to lower liquidity and broader exposure.

Among the funds most at risk is the Kraneshares CSI China Internet ETF, the largest of its kind in the US, with one-third of its assets in ADRs—half of which are not dual-listed in Hong Kong.