The correlation between the two indices is evident, as shown in the chart below (all have been rebased to 100 on June 1st 2012). While the S&P 500 has forged its own undulating upward path over the last six months, the Shanghai Composite and Liv-ex 50 have mirrored each other’s trajectory.
As we have previously observed, there has been a strong correlation between Chinese equities and the Liv-ex indices over the last two years. This appears to be holding. By contrast, US and UK equities show a low correlation. Will China continue to drive the fortunes of the Liv-ex 50 in 2013?