Don’t look now, but the original epicenter of the coronavirus pandemic currently has one of the planet’s best performing stock markets. And among exchange-traded funds tracking single countries, Chinese stocks have been this year’s best performers.

The SPDR S&P China ETF (GXC), for example, has jumped 11.4% this year. The fund has exposure to a universe of mainland Chinese stocks known as A-shares that are denominated in renminbi on the Shanghai or Shenzhen exchanges. GXC’s top holdings include familiar e-commerce giants like Alibaba Group Holding, Tencent Holdings and

China’s performance has defied its emerging-market peers.

Among the “BRIC” consortium, which China is a member, bellwether equity ETFs from Brazil, India and Russia have all posted negative results this year. The iShares MSCI Brazil ETF (EWZ) is down 29.6%, the iShares MSCI India ETF (INDA) is down 7.1% and the VanEck Vectors Russia ETF (RSX) has lost 11.2%. Moreover, it’s solely due to China’s equity rebound that the iShares MSCI BRIC ETF (BKF) has posted a modest year-to-date gain of 1.35%. 

“China is interesting to watch, because they went through the Covid-19 outbreak before the rest of the globe,” said Sylvia Jablonski, managing director at Direxion Investments. “Although they’ve had some setbacks, their economy is 70% to 80% back on line. That, coupled with the massive e-commerce population and growing consumption of technology, has gotten investors’ attention.”

Leveraged ETFs that aim for magnified performance have cashed in on the positive performance of Chinese equities. For example, the Direxion Daily CSI 300 China A Share Bull 2x Shares (CHAU) and the China Internet Index Bull 2x Shares ETF (CWEB) have jumped 12.7% and 61.7% year to date, respectively. Both funds aim for 2x, or 200% daily leverage to their underlying index. That means if the index should rise 2% on a single day, either fund should be ahead by 4%. Conversely, if the index falls by 2%, both funds would decline by 4%. 

Aside from coronavirus, China has managed to make a strong comeback despite another huge problem: Turmoil in Hong Kong marked by continued protests and China's political crackdown on the city.

Protestors in Hong Kong have been calling for human rights that include democracy and protections against extradition to mainland China. The relentless demonstrations have triggered the loss of human lives, along with business closures and traffic jams. While stocks from mainland China have been largely unaffected by protestor disruptions, Hong Kong’s stock market and local economy have struggled. 

The iShares MSCI Hong Kong ETF (EWH) has declined 10.8% year to date, which is a stark contrast to the performance gains in China’s mainland stocks.

Aside from the fact that EWH omits tech-centric companies such as Alibaba and Tencent, the fund is overweight in underperforming industry sectors including insurance, real estate and financials. Meanwhile, the fund has minimal exposure to sectors with better performing stocks such as biotech, telecommunications and semiconductors.

Will the rebound in Chinese stocks be the playbook for how economies and equities elsewhere behave, especially in underperforming markets? While it remains to be seen, the hope is that China’s upswing will be the pathway to better times ahead for others. 

Ron DeLegge is founder and chief portfolio strategist at ETFguide, and is the author of “Habits Of The Investing Greats.”