Hong Kong’s stock market has gone ballistic. In the past month the Hang Seng has risen by a fifth, reaching a new record high on Friday. For the first time in 18 years, the index is trading on a higher trailing price earnings multiple than the US S&P 500. “H” shares – those of mainland companies listed in Hong Kong – have done even better, up by almost a third. Yet over the same period the Shanghai market has, by its standards, put in a modest performance, rising by only a 10th.

Hong Kong’s dollar peg means that its interest rates mirror the Federal Reserve’s – this week the monetary authority cut rates by 50 basis points. Hong Kong would hardly be insulated from a global slowdown but, in simple terms, equity investors get the benefit of a rate cut without the immediate threat of a recession. This is compounded by a heavy weighting towards interest rate-sensitive stocks. Financials, utilities and property make up 61 per cent of the Hang Seng index. By global standards, banks have performed reasonably, and the rise in interbank rates, an indication of distress, has been modest.