Goldman Sachs warns of the scenario that frightens Wall Street, and the whole world is on edge -
- and it's not what you thought...
- It's not a recession.
- It's also not an attack on nuclear facilities or a third world war...
It's something else, which, at least according to Goldman Sachs, is much more realistic to happen
"$800 billion in the air – and the extreme scenario is no longer so imaginary"
The scenario?
- A complete financial decoupling between the US and China, which could shake global markets
Imagine:
Forced delisting of Chinese stocks from US exchanges, expulsion of massive investments, ETFs crushed within days, and a sense of panic shaking the largest institutions on Wall Street.
According to a new report by Goldman Sachs, this is no longer a fictional scenario, but a completely possible reality.
And the price? $800 billion (!) of Chinese stocks that American investors will be forced to sell.
In a scenario of deep financial decoupling between the two superpowers – American investors will be forced to:
1- Sell holdings worth $250 billion in Chinese ADR stocks (Alibaba, JD.com, and many others).
2- Unwind $522 billion exposure to Hong Kong stocks,
3- And decouple from small but risky holdings in Chinese A-shares – with a potential for immediate sale of only one day (!).
It doesn't end here..
In the event of mutual decoupling – the American side is also not immune:
Chinese investors hold approximately $1.7 trillion in American assets
– This includes: $370 billion in stocks, $1.3 trillion in US bonds.
As the sides approach a "breaking point," the potential for a massive shock is immense.
What is the impact on the ground? Goldman analysts estimate that in the delisting scenario: - The total value of Chinese ADRs will be cut by 9% The MSCI China index will drop by 4%
And this is even before an accumulated negative flow of $11 billion that will exit global indices (according to JPMorgan), simply because these stocks will be removed from the major indices.
Funds prone to falling: The most prominent fund in the US for investing in China – KraneShares CSI China Internet ETF – is right on the firing line:
- 33% of its portfolio is ADR stocks
- Half of them are not listed in Hong Kong at all
- And 72% of the fund's investors? Americans.
If a decoupling scenario begins, the fund could crash quickly – and hundreds of thousands of investors would be stuck without liquidity.
How long will the exit take?
According to Goldman Sachs: Exit from Chinese A-shares: only one day Exit from Chinese ADRs: approximately 97 days Exit from Hong Kong stocks: approximately 119 days
A mass exodus scenario? According to Goldman – no longer a Hollywood script – but a real financial simulation.
The broader context - all this is happening against the backdrop of political tensions between Trump and Beijing bubbling up again.
The US Treasury Secretary, Scott Bassant, has already declared that all options are "on the table."
Goldman is not just echoing an alarm – they are signaling that the global financial system is approaching a crossroads.
Investors – retail and institutional – need to dramatically follow every move between the US and China.
The chance of a head-on collision is rising, and when two titans collide – the tremors are felt in every corner of the globe.