Emerging market assets sprint to the end of 2024! Chinese stocks and Asian tech stocks lead the way.

In Tuesday's trading, emerging market assets showed significant upward momentum, benefiting primarily from the strong performance of the Asian technology sector and positive signals of China's upcoming economic stimulus measures. This positive trend has laid a solid foundation for significant double-digit growth in major stock market indices at the end of the year. The MSCI Inc. Class A Emerging Markets Stock Index rose for the second consecutive trading day before the holiday, with a year-to-date cumulative return of 8.6%, although this performance still significantly lags behind the over 20% return of developed markets. China's stock market led the market with a 1% increase, becoming the highlight of the day. This performance not only reflects investors' confidence in the Chinese economic outlook but also the positive impact of Chinese policymakers' plans to issue a record-breaking RMB 3 trillion special government bonds to boost the economy. Despite this news causing a sharp rise in government bond yields, with the one-year bond yield surging over 20 basis points, the Chinese stock market remains strong with a year-to-date increase of over 16%. Meanwhile, Asian technology stocks continued their recent uptrend. Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US) hit a record high stock price, with the world's largest contract chip manufacturer on track to achieve its best annual stock price performance in 25 years. Although the stock price rose 1.4% at one point on Tuesday before giving back the gains to close flat, overall, its performance remained remarkable. Alibaba Group Holding Limited Sponsored ADR also rose 3.5%, further consolidating the strong position of Asian technology stocks. However, not all emerging markets saw gains. While sovereign and corporate US dollar bonds in emerging markets had a return rate of around 7% in 2024, showing some market attractiveness, developing countries still face various challenges. Threats of increased tariffs by President-elect Trump, political tensions like GEO Group Inc, and signs of rising inflation all put pressure on emerging markets. Nonetheless, some investors remain optimistic about emerging markets, believing that the strong fundamentals of emerging market companies will help them steadily navigate through the uncertain environment. Arnaud Bou, Senior Fixed Income Portfolio Manager at Baosheng Media Group Holdings Ltd in Zurich, Switzerland, said, "While 2025 may bring further turmoil, especially when Trump formally takes office, the fundamentals of emerging market companies are very solid. Both investment-grade and high-yield companies have low net leverage and low default expectations, providing strong support for them." It is worth noting that the MSCI Emerging Markets Currency Index remained stable overall, but the Korean won significantly lagged behind, falling by 0.6%. This was mainly due to weak South Korean consumer confidence data and the opposition party's promise to initiate impeachment proceedings against acting President Han Dae-su.