China Stocks Break 15-Year Link With Hong Kong as Rates Diverge

The 15-year link between Chinese and Hong Kong stocks is breaking down.

While cross-border trade and capital flows have kept the two stock markets moving nearly in tandem for most of their history, that relationship is fading as the outlook for interest rates in China and Hong Kong diverges. The MSCI China Index’s 60-day correlation with the MSCI Hong Kong Index fell to 0.31 on Tuesday, the lowest level since May 2000, according to data compiled by Bloomberg.