China stocks face USD 800 bn outflow risk: US investors could be forced to offload up to USD 800 bn worth of Chinese equities in a worst-case scenario of financial decoupling, Bloomberg reports, citing a note from Goldman Sachs analyst Kinger Lau.

At stake: The estimate includes USD 250 bn in American depositary receipts (ADRs) — securities issued by US banks representing shares in a company listed on foreign indices — and USD 522 bn in Hong Kong stocks held by US institutional investors. Rising trade tensions and potential forced delistings could cause ADRs to lose 9% in value, while the MSCI China Index could take a 4% hit. JP Morgan also previously pegged potential passive outflows at USD 11 bn if ADRs are removed from global indices.

On the flip side: Chinese investors might dump up to USD 1.7 tn in US assets.

Chinese firms are poised to intervene to stabilize their stock markets through increased investment and share buybacks, Reuters reported last week. Companies including oil giant Sinopec and state holding firms are among those looking to invest more into tech, state firms, and ETFs, and buy back shares in a show of optimism to bolster China’s capital markets.

The data suggests the decoupling is already well underway, with China's FDI position in the US falling steadily over the past few years, reaching USD 44 bn in 2023, down 16% since 2019, indicating that Chinese investors have been pulling money from American projects, according to Reuters. The World Trade Organization projects an 80% drop in US-China merchandise trade for the year, signaling a shift towards two separate global trade blocs, Axios reports.

MARKETS THIS MORNING-

Japanese and South Korean markets are trading flat this morning, while China’s CSI 300 slipped 0.3%. Hong Kong and Singapore’s markets are closed for Good Friday.

ADX

9,259

0% (YTD: -1.7%)

DFM

5,062

+0.1% (YTD: -1.9%)

Nasdaq Dubai UAE20

4,086

-0.3% (YTD: -1.9%)

USD : AED CBUAE

Buy 3.67

Sell 3.67

EIBOR

4.1% o/n

4.1% 1 yr

TASI

11,553

-0.7% (YTD: -4.0%)

EGX30

31,062.95

+0.1% (YTD: +4.5%)

S&P 500

5,282.7

+0.1% (YTD: -10.2%)

FTSE 100

8,275.7

+0.1% (YTD: +1.26%)

Euro Stoxx 50

4,935.3

-0.6% (YTD: +0.8%)

Brent crude

USD 67.96

+3.2%

Natural gas (Nymex)

USD 3.25

-0.1%

Gold

USD 3,326.85

-0.5%

BTC

USD 84,997.72

+0.6% (YTD: -10%)

THE CLOSING BELL-

The DFM rose 0.1% yesterday on turnover of AED 909.5 mn. The index is down 1.9% YTD.

In the green: National General Insurance Company (+11.1%), Al Salam Sudan (+8.9%) and Parkin (+6.8%).

In the red: Al Mal Capital REIT (-9.3%), Dubai Refreshment Company (-4.6%) and Al Firdous Holdings (-3.6%).

Over on the ADX, the index fell 0.01% on turnover of AED 1.2 bn. Meanwhile, Nasdaq Dubai was down 0.3%.

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