Hop on Europe's cyclical ride
Europe’s outperformance in 4Q20 is extending into the new year, boosted by improving global sentiments over vaccines and optimism on the US economy from a Democrat-controlled Congress. In Europe, a no-surprise Brexit outcome and the conclusion of the China-European Union Comprehensive Agreement on Investment (CAI) at end of last year have also driven hope for better recovery prospects, as the region looks past Brexit and seeks better cooperation with China for a more sustainable recovery.
However, these two agreements are still subject to further negotiations. A post-Brexit world will not be simple. Issues related to data security, financial services, and fishing rights may well become sources of renewed friction in the coming years. The negotiations for the CAI has taken eight years and were intended to cover market access as well as investment protection. The latter is still left to negotiations for a future agreement.
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