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Can someone please explain this to me: in 2006, HSI moved almost identical like indexes on the New York Stock Exchange. However, the crisis period (2007-2011) shows the deviation from the others.

My question is this: why did the crisis not affect HSI and did China's economy progress while others were depressed?

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@ mod (whomever) - I voted to close but would like to retract. Maybe the impression it was homework put me off, but on further reflection it seems a good question, why do markets sometimes appear in sync, but during other times, not so much. The example should be take more in that light. CQM answered with good specifics why this was the case. – JoeTaxpayer Dec 5 '12 at 20:00
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I am still curious as to why it was urgent. I like that we got an interesting answer out of it. – MrChrister♦ Dec 8 '12 at 4:52

2 Answers

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Contributing factors to the diversion were that:

A) China's currency does not float like other major countries' currencies

B) China's real estate market didn't have the same lending criteria leading to the level of speculation seen in USA, at the time.

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"why do markets sometimes appear in sync, but during other times, not so much"

By "markets" I'm assuming you mean equity indices such as the HSI. Financial products fluctuate with respect to the supply/demand of the traders. There's been a large increase in the number of hedge funds, prop desks who trade relative values between financial products, that partially explains why these products seem to pick up "sync" when they get out of line for a while.

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Hi Rocko, welcome to Money.Stackexchange. Good answer. – C. Ross♦ Dec 19 '12 at 14:14

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