Chinese stock gains, which have traditionally benefited other emerging markets, are currently not having the same impact. Chinese equities have surged in the past six months, breaking a prolonged downtrend, while other developing nations' stocks have remained relatively stagnant. The reason for this disparity is attributed to the tech-driven frenzy propelling Chinese gains, rather than an economic improvement that would typically spill over to other economies through trade connections.

According to Manik Narain, head of emerging-market strategy research at UBS Group AG in London, China's outperformance is driven by a tech-driven increase in consumer spending rather than investment, and it is unlikely to significantly affect other emerging markets as seen in previous years. In contrast to historical trends where Chinese and emerging-market stock gains were correlated, the MSCI China Index has soared over 30% since August while the emerging markets index excluding China has declined by almost 7%.

Initially, Chinese stocks rose in September due to optimism about economic stimulus, but the gains were reversed when policy announcements fell short. It was not until the introduction of a new artificial-intelligence model in January that a sustained rally in Chinese stocks commenced. This divergence is also reflected in investment flows, with significant inflows seen in funds tracking Chinese stocks while outflows have been observed in emerging-market funds excluding China.

Vincenzo Vedda, chief investment officer at DWS International in Frankfurt, suggests that beyond the tech industry, broader factors are contributing to the increased investor optimism towards Chinese stocks. This optimism may continue to drive better returns from Chinese equities compared to other emerging markets in the near future.