"Public Risk Exposure Amounts to 88 Trillion Won"… US Investment Banks Raise Loss Concerns Amid US-China Tensions

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As tensions between the United States and China escalate, concerns are emerging that five major U.S. investment banks, including Goldman Sachs and JP Morgan, which invested a total of $70.8 billion (approximately 87.6 trillion KRW) in China last year, could face significant losses.

On the 29th, Bloomberg reported that the exposure of the five major investment banks?JP Morgan, Goldman Sachs, Morgan Stanley, Citigroup, and Bank of America (BoA)?to China reached $70.8 billion last year. JP Morgan’s lending, trading, and investment scale alone amounted to $19.2 billion, marking a 10% increase compared to the previous year.

Although the scale of China-related assets is not relatively large at the moment, Bloomberg pointed out that investment banks, which earned huge profits from underwriting Chinese companies listed in the U.S., such as Alibaba, could be hit hard. In the case of Goldman Sachs, the expected revenue from the Chinese capital market industry is projected to reach $47 billion by 2026. Additionally, as foreign investment banks accelerate their entry into the Chinese capital market, U.S. firms may face disadvantages.

If sanctions targeting Chinese financial institutions related to the Hong Kong National Security Law (Hong Kong Security Law) materialize, U.S. financial institutions could also be affected. This is because retaliatory measures from China against the U.S. would inevitably cause direct damage to American investment banks. In the U.S., measures are being considered to impose strict accounting regulations to prevent Chinese companies from easily raising funds in the American capital market, along with bans on Chinese stock investments by U.S. pension funds.

A U.S. financial professional who previously worked at a Chinese financial institution said, "Since enormous profits are expected when entering the Chinese market, U.S. banks have no choice but to expand their China-related businesses," adding, "The U.S.-China cold war will have a negative impact on business."

This content was produced with the assistance of AI translation services.