Asian economies, including China, Japan, Australia and many southeast Asian nations, have signed the Regional Comprehensive Economic Partnership (RCEP). Asian economies are already in good spirits, says Laura He on CNN. The region has largely dodged the worst of the pandemic. The RCEP deal will only reinforce the eastward drift of the global economy’s centre of gravity.
Not everywhere in Asia is so fortunate. India’s economy has been hit hard by Covid-19, but its BSE Sensex index hit a new record high this week on positive vaccine trial news. The index has gained 69% since the mid-March low. Indian equities have also been boosted by the unwinding of US election risks, says Buttonwood in The Economist. With less to worry about at home, American money managers are ready to go shopping abroad.
Emerging markets certainly have some catching up to do: the MSCI Emerging Markets Index has gained just 3% over the past ten years and remains short of its 2007 all-time high. While some east Asian emerging markets have soared of late, Brazil and South Africa have lagged. The case for emerging markets has long rested on powerful demographic trends, say Tony Roth and Meghan Shue on CNBC.com. But today the central role of Asian economies in the “digital revolution” is just as important.
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As well as manufacturing most of the world’s gadgets, Asian consumers are also the most enthusiastic digital adopters. The region’s economies are “years ahead” of America’s when it comes to “contactless payments” and “facial recognition software”. Post-pandemic, the likes of Vietnam, Indonesia and India are likely to get a boost as multinational companies re-think their supply chains. “The smart money” is betting on emerging markets.
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