The relatively low correlation between the movements of stock markets in different countries reflects that different stock markets are still somewhat segmented from each other by capital controls.

Question

Quizplus · Accepted Answer

Capital controls, which are restrictions on the movement of funds in and out of a country, can limit the flow of investment between different stock markets. This can lead to a lower correlation between the movements of stock markets in different countries.

The Relatively Low Correlation Between the Movements of Stock Markets