Often it is easier to focus on what is going wrong in the investment community than what is going right.
This is particularly the case during the COVID-19 pandemic which has changed so many things, most of them for the worse.
It is easy to develop tunnel vision and concentrate on these negatives, without realising that the pandemic has treated various countries and regions very differently.
US and Europe hit really hard
The countries we hear a lot about – the United States and Europe – have been hit particularly hard and are still in a world of pain and destruction.
Europe and the US between them account for around two thirds of the pandemic deaths around the world and, if anything, look like they might add to that percentage given the sheer number of their second wave infections as they head into winter.
That is a serious over-representation compared to their combined population of around 20% of the globe.
Asia has performed much better
The flipside to that is that China in particular and Asia more broadly have recovered remarkably well from the pandemic and have only suffered around 15% of the world death toll, way behind their population representation of 60%.
There may be a number of reasons for this starkly better performance, be it a more co-operative and cohesive social approach to fighting the pandemic, better governance, more experience and speed in mask wearing and hygiene measures or other factors such as temperature, genetics or even the use of technology.
Whatever the reason or combination of reasons for Asia’s superior performance, it is already showing itself in terms of a far better economic performance.
While the US and Europe are pushing literally every fiscal and monetary stimulus button they can find in an attempt to jump start their economies – including running massive deficits and consequent debts – China has recovered its growth trajectory very quickly without needing to launch large economic rescue packages.
By the end of this year, some analysts think that China’s economic output will be running more than 10% above its pre-virus level while the US and Europe will still be lagging well behind.
First in, first out?
It may be that this is partly because China experienced the pandemic first and so it is naturally faster to recover but so far it has actually avoided a recession, with a 6.8% fall in growth in the first quarter of 2020 being followed by quarterly rises of 3.2% and 4.9% with the likelihood that the pace of growth will continue in the fourth quarter.
It is a similar picture, although not universally so, for much of Asia.
Vaccine should be a game changer
Of course, there are reasons to be cautious about seeing this as an enduring trend, with the advent of a successful vaccine – or even several of them – holding the potential to dramatically change the global picture.
While a vaccine would take some time to implement, the wealthier countries in Europe and the US would likely benefit more quickly, although it is worth pointing out that China has several vaccines on the way as well.
With a vaccine employed and international travel able to progressively open up, the global investment and economic picture changes dramatically with foreign investment and trade able to ramp back up quickly.
Momentum is with Asia
Still, even a fairly speedy vaccination program will see China and large parts of Asia growing much faster than Europe and the US, which have suffered a major shock from rolling lockdowns, deaths and hospitalisations.
The momentum in those countries hit much more lightly by the virus is likely to be much greater than those that were hit hard and implemented massive economic stimulus programs.
The Chinese share market has been reaching record highs and the value of the renminbi has been rising on the back of a weak US dollar.
Here, in Australia, the trend has been clearly visible in some exchange traded funds (ETFs) such as BetaShare’s Asia Technology Tigers (ASX: ASIA) which holds the 50 largest Asian technology companies outside Japan.
With the pandemic also accelerating the use of technology, this ETF has steadily risen in price by a stunning 67% in the past year, with most of that growth happening since the market bottom in March.
It is an impressive performance during some tough global times and shows why it pays to be alert to global opportunities that are emerging, even as many of the more “normal’’ investment options are performing so poorly.