The coupling effect of equity price changes has become increasingly visible on the main bourses of Korea and China, stock research analysts reported Thursday.
The two countries have seen concurrent rises and falls in their benchmark indices since June 13 on every day except one.
On those days, the indices saw continued drops compared to the previous days, except June 14 and 17 when they both went up.
The coupling effect is reflective of the increasing influence of the Chinese economy and stock market on the Korean stock market, experts said.
The Korean market’s sensitivity to China’s market fluctuation is expected to continue in the wake of the U.S. exit strategy from monetary easing and China’s weakening credit rating, they said.
For quantitative evidence of the market coupling, experts pointed out that the correlation rate between the two countries’ benchmark indices ― the Korea Composite Stock Price Index and the Shanghai Composite Index ― reached as high as 0.40 on Wednesday. A correlation coefficient of 0.40 or higher is generally viewed as a substantial sign of market coupling.
The correlation digit broke the 0.40 market for the first time in six months since December 2012.
Meanwhile, studies showed that the Korean stock market is the second-most sensitive to the Chinese economy, behind only Indonesia. Thailand, Hong Kong, Taiwan and Singapore are less affected by the fluctuation of the Chinese stock market.
By Chung Joo-won (
joowonc@heraldcorp.com)
