Recent trends in the global financial markets have attracted widespread attention from investors. By analyzing the weekly charts of the US dollar index, Hang Seng Index, and Shanghai Composite Index, we can discover some interesting market correlations.

Starting from October 4, 2023, the US Dollar Index began a period of appreciation that will last until January 17, 2025. This strengthening of the dollar during this phase has had a significant impact on global financial markets, particularly putting pressure on the stock markets in Hong Kong and mainland China. During this period, both the Hang Seng Index and the Shanghai Composite Index experienced noticeable declines, with the Shanghai Composite Index undergoing a substantial adjustment of 10.8%.

This phenomenon has prompted us to reflect on traditional views. As the saying goes, 'the stock market is the barometer of the economy,' but based on this market performance, it seems more appropriate to say that 'the stock market is the barometer of exchange rates.' The fluctuations in the RMB exchange rate have a direct impact on capital flows: when the RMB appreciates, it often attracts international hot money into markets such as Hong Kong stocks and A-shares, driving these markets up.

However, when discussing the causal relationships in financial markets, we need to exercise caution. As philosopher David Hume stated, our understanding of causality is likely just a psychological habit, stemming from repeated observations of specific sequences of events. As an observer with a background in science and engineering, I believe that strict causal relationships need to be validated through repeated controlled experiments.

In the financial sector, due to the inability to conduct rigorous experiments, we should focus more on statistical correlations rather than simply inferring causation. Data shows a strong negative correlation between the US dollar and Hong Kong stocks, with a correlation coefficient of -0.892. At the same time, Hong Kong stocks also exhibit a strong positive correlation with A-shares.

These observations remind us to avoid oversimplifying when interpreting financial markets. Market fluctuations are the result of multiple factors acting together, and we need to consider a comprehensive range of potential influencing factors rather than relying solely on a single explanatory model. Only by doing so can we better understand and respond to the complex changes in the global financial market.