Reason #4: Beaten Down Markets Poised For a Turnaround

As I already mentioned, China's stock market sold off dramatically in 2008. And while these losses are hard to swallow, they also signal that the Chinese stock market is due for a correction to the upside.

Helping Chinese stocks turnaround is China's stable inflation rate. As we discussed above, the Chinese government has plenty of room to make more rate cuts this year, which bodes well for Chinese stocks. China's inflation rate is stable, with an annual average inflation in 2008 of around 6%. And CPI inflation in 2009 could be as low as 3% and should be no higher than 4%. (See also: "Why China Will Shine in 2009.")

This, in addition to the oversold condition of the Chinese stock market, is allowing Chinese stocks to gear up for a powerful rebound. They are gaining steam as we speak — since the lows set on October 27, Hong Kong's Hang Seng index has rallied 41.7%. And that is just the beginning. I'm expecting the Chinese government's bold actions to stimulate economic growth to really kick in early 2009, which will lead to an economic recovery in the second half of the year.

And since equities tend to rally six months before the economy really rebounds, Chinese stocks are headed even higher. That's why now is a great time to be picking up shares.

Prepare Now!

As I just discussed, not every Chinese company will participate in the rebound. But many stocks will and fuel the global markets move higher — you just need to know which companies will benefit the most. And in China Strategy, that's exactly what you'll find out. My subscribers are already preparing for the Chinese market rebound by investing in my China Strategy companies that will be leading the charge.

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