Because Chinese financial regulations keep its markets largely insular—overseas investors cannot acquire domestic Chinese stocks and Chinese investors are greatly limited in what stocks they can buy overseas—its benchmark Shanghai Composite Index hasn’t been affected by the credit crisis affecting so many markets around the world, The Wall Street Journal reports.
Although the index slid slightly last week, it is up 4% since the beginning of the month and 74% since the beginning of the year.
In fact, the market in China is so strong that the central bank recently lowered its cash supplies, whereas regulators in other markets are doing the opposite.
Still, experts continue to say that the Chinese market is due for a correction. They just don’t think it will be the result of the U.S. credit problem. One caveat that could impact China’s economy, however, is that if consumer demand softens around the world, it could slow China’s exports.