China is in race before the rest

China’s market is supported by positive investor sentiment that the economy is recovering after the virus was contained. Indeed, China has the First In – First Out advantage in dealing with the pandemic, which enabled it to open the economy much earlier and push the manufacturing industry up. Macro data also supports this narrative, as the country reported upbeat industrial production data for October, surging exports to the highest since March 2019, and positive retail sales data for the same month.

Mobility and travelling in China has returned close to pre-COVID levels, with airlines, restaurants, and hotels working at full capacity and expected to surpass pre-COVID levels by the end of December.

Meanwhile, as we previously reported, China signed the Regional Comprehensive Economic Partnership (RCEP) agreement on Sunday along with 14 other countries. This is the largest trade agreement in history, as it covers 30% of both the world's population and GDP.

Another bullish fundamental comes from a geopolitical standpoint. The Biden victory means more conciliatory policies towards China regarding trade, which should eventually ease volatility in China-related stocks, thus benefiting emerging markets as a whole.