The hypothesis of a “financial divorce” between United States and China The markets tremble today. In an interconnected world such as ours, the tightening of commercial and technological tensions between the two world superpowers could in fact trigger profound consequences, even for Italian investors.
Goldman Sachs is launched the alarm, which estimates a possible capital exodus from 800 billion dollars In Chinese actions held by US investors, in the extreme case of a complete misleading between the two countries.
What is risked with the exclusion of Chinese companies from US bags
According to Goldman Sachs, the US financial institutions currently hold about 250 billion dollars in Chinese ADR (American Depositary Receipts, or Chinese actions exchanged at Wall Street), equal to 26% of total capitalization of these tools. To these are added 522 billion in actions of Hong Kong and a marginal presence (only 0.5%) in the Chinese domestic market of the A-Shares.
In a scenario of “Forced delisting” – that is to say The exclusion of Chinese companies from American bags – one is estimated immediate loss of value of 9% On the ADR and 4% on the MSCI China index. The passive funds and ETFs exposed to China would pay the account, such as the Kraneshares CSI China Internet Fund, which holds a high share of ADR (33%) and has 72% of its capital in American hands.
Because the crisis could extend and how
As the experts point out, The crisis would not only affect Beijing. Goldman highlights that Chinese investors may also have to dispose of up to $ 1,700 billion in American financial assets, of which 370 billion in shares and 1,300 billion in bonds. A potentially devastating repercussing for US markets and, by extension, for the entire system global financial.
The domino effect could be rapidly triggered: the Chinese A-Shares could be sold in a single day, while to get rid of the ADR and actions to Hong Kong would serve 97 and 119 days respectively, according to the business bank simulations.
What does all this mean for Italian investors?
Italy is not indifferent spectator in this global match. Savers and Italian funds, especially those exposed to ETFs and global funds with positions in China or the United States, could find themselves involved in one financial storm made of volatility, forced corrections and reduction of the net property value.
In particular, the Emerging Etfs and balanced funds Following global indexes such as MSCI World or MSCI Emerging Markets could be forced to re -finance the wallets if the Chinese actions were excluded from the international indexes. JPMORGAN Estimation of passive outflows for at least 11 billion dollars only from this mechanism.
Furthermore, very present Chinese companies In retail wallets – such as Alibaba, JD.com or Baidu – they are all listed via ADR in New York. In case of delisting, small investors may not have direct access to alternative markets (such as Hong Kong), risking to remain “trapped” or forced to loss.
Actions at risk
In the context of a possible financial decoupling between the United States and China, it is essential that the Italian investors – both retail and institutional – carefully analyze the positions in the portfolio. Some securities and tools may find themselves under increasing pressure, while others may benefit from the movement of global economic balances.
Among the most at risk actions, there are:
- Chinese companies listed on Wall Street without double quotation in Hong Kong, which being listed only through ADR (American Depositary Receipts) in the US markets, would be among the first to undergo the consequences of a forced delisting. In the absence of an accessible trading alternative, Western – including Italian investors included – could find themselves with illiquid or difficult to sell titles, with consequent sudden value losses. In addition, an escape of American capital from these titles could accelerate the drop in prices;
- ETFs focused on China, such as Kraneshares CSI China Internet Fund, which risk particularly strong impacts in the event of misleading. They include an relevant share of ADR and are often made up of high volatility titles related to technology, e-commerce and digital innovation. If forced sales were starting from US passive funds, these tools would undergo an immediate bearish pressure that could also be reflected on European markets through UCITS ETFs domiciled in Ireland or Luxembourg but exposed to these indices;
- Bond funds exposed to the US or Chinese debt, which include state securities or Chinese and American corporate bonds could record significant output flows if Beijing decides to arrange American financial assets (up to 1,700 billion dollars according to Goldman Sachs). The consequent increase in volatility in rates and bonds would also impact the funds held by Italian investors directly;
- Large banking groups strongly present both in the United States and in Asia, which could be affected by a contraction in exchanges and a growing difficulty in managing cross-border operations. This could reflect in reduced margins, greater risk aversion and a loss of trust from investors.
