(Bloomberg) — Bond prices in China are increasingly being influenced by stock market flows, with a rush from fixed-income to equities pushing the correlation between the two markets to its most extreme level in over four years.
The 30-day correlation between the Shanghai Stock Exchange Composite Index and the Bloomberg China Treasury Total Return Index hit its most negative level since 2020 in October, and remains well below its average for this year, shows data compiled by Bloomberg. The bond index gained less than 0.1% last month, its worst performance since September 2023.
“An increasing number of traders are watching stocks to decide how to trade bonds,” said Lv Pin, chief fixed-income analyst at Topsperity Securities, a Chinese brokerage. “Recently the correlation got so close that the linkage in the two assets’ moves could be even down to minutes, which is rare.”
The differing fortunes of China’s bond and stock…
