US investors to offload $800 billion of China equities? Goldman Sachs warns of ‘extreme scenario’ amid escalating trade war

US investors may reportedly be forced to divest approximately $800 billion of Chinese equities “in an extreme scenario” if financial separation occurs between the world’s largest economies, according to Goldman Sachs Group Inc.
Presently, US institutions hold roughly 7% of Chinese companies’ American Depositary Receipts (ADRs) market capitalisation, with limited Hong Kong trading capabilities. Goldman analysts, led by Kinger Lau, noted in a Wednesday report quoted by Bloomberg that these investors might face difficulties acquiring shares in Hong Kong if companies such as Alibaba Group Holding Ltd. face involuntary US delisting.
Goldman has joined other international banks in evaluating worst-case scenarios for investors amid growing US-China financial separation concerns. The possibility of American exchanges removing Chinese companies, first raised during Donald Trump’s presidency, has re-emerged following Treasury Secretary Scott Bessent’s statement that all options remain “on the table” in China trade negotiations.
The analysts highlighted unprecedented uncertainty in global trading, resulting in significant market volatility and worries about worldwide recession. They project that forced delisting could lead to 9 per cent and 4 per cent valuation decreases in ADRs and the MSCI China Index, respectively.
US institutional investors currently possess Chinese ADRs worth $250 billion, representing 26 per cent of total market value, Goldman reports, as per Bloomberg. Their Hong Kong stock holdings amount to $522 billion (16% of market total), whilst maintaining 0.5% of China’s A shares, totalling over $800 billion in Chinese equities.
Goldman calculates that US investors could exit A shares within one day, whilst requiring 119 days for Hong Kong stocks and 97 days for ADRs. In this scenario, Chinese investors might need to sell US financial assets worth $1.7 trillion, comprising $370 billion in equities and $1.3 trillion in bonds.
Amid the looming threat, the Kraneshares CSI China Internet Fund, America’s largest China-focused ETF (Exchange-traded fund), faces significant risk from forced liquidation due to ADR delisting, according to Goldman. The fund maintains 33 per cent ADR weighting, half lacking Hong Kong listings, with 72 per cent US investor ownership.
JPMorgan Chase & Co. had previously estimated that ADR delistings could trigger global index removals, potentially causing passive outflows of approximately $11 billion.

US-China trade war: Could India win be the winner amid the conflict of world’s two biggest economies?

The escalating US-China trade war, marked by Trump’s imposition of up to 245% tariffs on Chinese imports, has created significant global disruption but also a potential opportunity for India. As the US targets China’s tech, minerals, and consumer goods sectors, India’s minimal trade exposure—just 2.7 per cent of US imports—shields it from direct impact, allowing it to emerge as a neutral and scalable manufacturing alternative.While Beijing has responded with retaliatory duties and tighter export controls, India has maintained a non-retaliatory, conciliatory stance, seeking closer trade engagement with the US instead.
This strategic posture, combined with India’s $26 billion in manufacturing incentives under the ‘Make in India’ campaign, is drawing renewed global interest. Apple Inc., for example, has significantly expanded its India operations, assembling $22 billion worth of iPhones in the year ending March—a 60% increase over the previous year. In March alone, nearly $2 billion worth of iPhones were airlifted from India to the US to bypass looming tariffs.India now assembles all iPhone models, including premium variants, and exported $17.4 billion worth in FY25, with its share of global iPhone production poised to hit 30%.
Amid these shifts, Chinese firms are also reassessing their India strategies. Facing mounting tariffs and reduced access to the US market, companies like Shanghai Highly and Haier have shown increased willingness to comply with Indian regulations. They are now open to minority ownership in joint ventures and technology-sharing agreements—terms they previously resisted. Shanghai Highly, for instance, renewed talks with Voltas and formed a technical collaboration with PG Electroplast, while Haier is negotiating to sell a majority stake in its local operations.
Despite the momentum, India’s structural challenges remain. Manufacturing accounts for less than 13 per cent of its economy, down from 15 per cent, and industries still depend heavily on Chinese inputs and foreign machinery. Businesses also face hurdles such as a shortage of skilled labor, expensive land, limited credit, and bureaucratic red tape. These constraints could limit India’s ability to fully capitalize on the shifting trade dynamics.
Still, global sentiment is tilting in India’s favor. Foreign investors have poured $25 billion into Indian markets this year, and the Nifty 50 has rebounded strongly, outpacing markets hit by tariff shocks. With Apple leading the way and more firms eyeing India as a de-risking destination, the country stands well-positioned to gain from the US-China standoff. If it can address its internal bottlenecks, India may indeed turn this moment of global tension into a long-term manufacturing breakthrough.