Forbes’ Kenneth Fisher says he’s found a good timing mechanism for investing in Chinese stocks, and says it is showing that the “stars are in alignment” for Chinese equities in 2012.
The timing approach is based on the idea that politics drives the economy and market in China, Fisher says. “China’s powerful Communist Party leadership has a cultural history of trying to depress the economy (and hence stocks) in varying ways two years before elections, which occur every five years,” he writes in his latest column. “Then they gun it as the election approaches.”
Fisher says that’s playing out again this election cycle. Monetary growth and fiscal stimulus tumbled and taxes were high in 2010 and 2011, but the government has made several moves — including a major income tax cut and a cut in the energy production tax — in the past few months to promote growth this year (which is an election year). “So,” Fisher says, “China is priming the pumps of its economy, and the ripple effect will be felt by stocks.” He offers seven Chinese stock picks, including China Telecom.