The Next Trade: China’s Trading Partners Are Waking Up
From Malaysia to Mexico, the quiet shift in global leadership is already underway.
My grandmother used to sing, “Patience, patience — seldom held by a woman, and never by a man.”
It drove me crazy as a kid.
Now I hear it every time I look at charts like these — slow-moving, long-basing patterns that test every ounce of patience before they break. But when they do, they change the map.
That’s exactly what we’re seeing in global markets right now.
For years, the U.S. has dominated performance, sucking up liquidity and capital flows. But beneath the surface, money is starting to migrate — quietly, methodically — into different corners of the world. And if you zoom out far enough, you’ll see something interesting: China’s trading partners are starting to show relative strength.
The Malaysia Setup: Quiet Moves, Big Implications
Let’s start with Malaysia.
The Malaysia Index Fund ($EWM) has spent nearly a decade carving out a massive base. The chart looks like a coiled spring — rounded bottom, multi-year resistance, and now, signs of accumulation.
But the timing here isn’t just about price — it’s about politics and partnerships.
This week, China and Malaysia announced joint military drills — focused on cooperation, disaster relief, and maritime coordination. On the surface, that might sound like a routine defense partnership. But context matters.
In The Art of War, Sun Tzu wrote:
“Appear at points which the enemy must hasten to defend; march swiftly to places where you are not expected.”
China isn’t making loud moves. It’s making strategic ones — strengthening ties with nations that sit along key trade and resource routes. Malaysia fits perfectly into that play. Located at the heart of Southeast Asia, it’s a vital shipping corridor for trade, energy, and technology flows.
When you combine that with a slow-building technical breakout and improving liquidity across Asian EMs, you start to see the pattern: China’s quiet diplomacy is setting up economic leverage through its partners.
(Not ready to buy yet but premium subscribers will get the alert.)
Latin America’s Turn: The Resource Connection
While Asia builds alliances, Latin America is quietly coming back to life.
The Latin America 40 ETF ($ILF) has been in a long downtrend since 2008 — that’s 17 years of underperformance. But look closely at the chart: it’s starting to break the downtrend line for the first time in over a decade.
Latin America’s story is simple — resources. China has spent the last two decades building relationships across the region, pouring billions into infrastructure, mining, and energy partnerships.
According to the Inter-American Dialogue, China’s trade with Latin America now exceeds $500 billion annually, up from just $12 billion in 2000. Brazil, Chile, and Peru are among the biggest exporters of iron ore, copper, soybeans, and oil to China.
The pattern is clear: as China stimulates, Latin America rallies.
And the charts are beginning to reflect that.
Brazil: The Engine of the South
If there’s one market that stands to benefit the most from this cycle, it’s Brazil.
The MSCI Brazil ETF ($EWZ) is heavily weighted toward banks — but those banks are not just financial institutions. They’re deeply tied to the nation’s real economy — mining, energy, and agriculture.
Brazil exports over 40% of its soybeans and nearly 60% of its iron ore to China. When China grows, Brazil thrives. When commodities move, Brazil moves.
It’s no coincidence that every major upcycle in grains — corn, soy, wheat — has aligned with strength in Brazilian equities.
This is the feedback loop that’s quietly forming again:
China’s stimulus and regional partnerships →
Commodity demand rises →
Latin America’s resource economies expand →
EM equity strength builds →
Global capital rotation out of the U.S. accelerates.
In the language of The Art of War:
“In the midst of chaos, there is also opportunity.”
The chaos of shifting global supply chains, rising tariffs, and currency volatility is creating opportunity for nations outside the U.S. to step into leadership roles. Brazil is one of them.
Mexico: The Bridge Between Worlds
Now, let’s talk about Mexico — arguably the most strategically positioned country on the planet right now.
The MSCI Mexico ETF ($EWW) is sitting right beneath long-term resistance that dates back to 2007. That’s 18 years of waiting. The moment it breaks, it opens a runway to multi-decade highs.
But what’s even more interesting is why it’s setting up.
Chinese investment in Mexico has exploded over the last five years. According to Mexico’s Ministry of Economy, foreign direct investment from China increased over 400% since 2018.
Why? Because Chinese manufacturers have been setting up plants in Mexico to sidestep tariffs and access U.S. markets under the USMCA framework. In other words, China doesn’t need to export from Shanghai when it can export from Monterrey.
That’s not just smart geopolitics — that’s Sun Tzu economics.
“The supreme art of war is to subdue the enemy without fighting.”
By embedding itself within North America’s supply chain, China effectively turns Mexico into an extension of its trade network — quietly benefiting from proximity, labor cost advantages, and trade loopholes.
It’s no surprise that while U.S. small caps struggle, Mexico’s industrial output and export growth are near record highs.
The Broader Theme: The Next Vietnam Trade
If you think back to the last big “China adjacency” trade, it was Vietnam.
Over the past decade, as companies diversified away from China, Vietnam became the prime beneficiary of manufacturing relocation — its equity market and currency strengthened, and capital poured in from global investors seeking “next China” exposure.
Now, that pattern looks to be repeating — but more broadly.
Malaysia, Brazil, and Mexico are all showing similar setups:
Long-term technical bases forming at multi-year support
Strengthening economic ties with China
Accelerating trade and investment flows
Rising commodity demand in their favor
These are the markets quietly working while the crowd debates rate cuts and recession probabilities.
The Macro Shift: From U.S. Dominance to Global Rotation
We’ve spent the better part of a decade in a U.S.-centric regime — where capital flowed into the dollar, into U.S. equities, into mega-caps.
But cycles change.
The dollar is rolling over, commodities are firming, and the breadth of global equity leadership is expanding. As that happens, international diversification stops being a defensive play — it becomes an alpha generator.
What we’re witnessing is the early phase of that rotation.
The last time this happened? The 2000s commodity supercycle — when emerging markets, led by Brazil, Malaysia, and Mexico, dramatically outperformed the U.S. as capital flowed toward growth, resources, and global infrastructure.
Patience Before the Break
In The Art of War, Sun Tzu writes:
“He will win who knows when to fight and when not to fight.”
For traders and investors, that means patience.
These charts — EWM, ILF, EWZ, EWW — are all coiling under multi-year resistance. They may not explode tomorrow, but the structure is there. The fundamentals are aligning. And the capital flows are quietly building beneath the surface.
This is where the next 10x outlier trade will come from.
The smart money doesn’t wait for CNBC to announce the breakout. It positions while the pattern forms.
Patience, as my grandmother sang, is seldom held by a woman and never by a man.
But in markets — it’s often the difference between catching the move and chasing it.
📈 The Global Rotation Is Paying Off
At Against All Odds Research, we’ve been positioned ahead of this shift all year — and it’s showing up in the numbers.
Our international exposure continues to lead with strong gains across the board:
🇨🇳 China (FXI, KWEB) up 36%+ as liquidity and trade activity rebound. Over 100% since we first put on the trade in 2024.
🇨🇴 Colombia (COLO) and 🇨🇱 Chile (ECH) up 49% and 34%, driven by rising commodity flows.
🇵🇱 Poland (EPOL) and 🇮🇹 Italy (EWI) breaking out with 58% and 47% moves.
🇧🇷 Brazil (EWZ) up 35% — fueled by agriculture, energy, and metals exposure.
🇿🇦 South Africa (EZA) climbing 60%+ as mining and precious metals recover.
🇭🇰 Hong Kong (EWH) both trending higher with renewed capital inflows.
🇲🇽 Mexico (EWW) pushing toward multi-decade highs, benefiting from nearshoring and Chinese manufacturing investment.
🌍 Commodities (URNM, REMX) and Precious Metals (PPLT, PALL, WPM, HL, MAG) delivering double- and triple-digit returns.
And, these are just the ETFs-our futures, stocks and options are much higher.
This isn’t luck — it’s rotation.
The capital shift we’ve been tracking is no longer theory — it’s in the data, the charts, and the returns.
We don’t chase trends. We position for them.
👉 Join us and see what the hype is all about:
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