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Since that fateful day in February, when the Chinese stock market fell 9% in a single session, China has defied the laws of subprime. Whereas the rest of the world has been looking for respective bailouts from key central banks, investors in the Chinese market haven't needed anything but their brokerage accounts.

Few would argue against the probability that China's is the 21st century's powerhouse to watch. Yet the stock market activity in the Big East has directly paralleled the insanity of the U.S. dot-com era.

Is a change in the works? Possibly. The iShares FTSE/Xinhua China 25 Index (NYSEARCA:FXI) fell 8% yesterday alone. The PowerShares Gldn Dragon Halter USX China (NYSEARCA:PGJ) shed 6%.

Keep in mind, the FXI had set yet another record just two days ago. It had recorded a 30% YTD gain... much of it during the subprime shakeout.

Although it hasn't been "cool" to be Fed-friendly or a fan of Greenspan (not lately, anyway) I must agree with Alan Greenspan's opinion on the Chinese stock market. On 5/25/2007, the former Fed Chairman expressed a viewpoint that "shares are overvalued and might be heading for a dramatic contraction." (By the way, the Chinese market has rallied 22% since Alan spoke out 3 months ago.)

Keep in mind, China is/will be the next economic superpower. Moreover, I do not see the dramatic correction happening due to subprime exposure or a global slowdown; rather, China's stock market will melt like an iceberg in the Northern Hemisphere when get-rich gambling gives way to irrational dread.

I don't think we're there yet. In fact, with the 2008 Olympics in sight... China may party like it's 1999 for at least another year. That's why I look to leadership from countries like New Zealand, Australia and developed countries in Southeast Asia like Taiwan to prosper.

I haven't had much success with the iShares MSCI Taiwan Index (NYSEARCA:EWT). Its tie to the semiconductor industry has hurt it in recent years. In contrast, I have found the regional exchange-traded fund, the iShares MSCI Pacific excluding-Japan Fund (NYSEARCA:EPP), to be a lower-risk approach to profiting from China's ascendancy.

FXI vs. EPP 1-yr chart: