Big banks in Asia look set to jump — and these stocks may leap the most

Published Thu, Mar 25 202112:06 AM EDT

Big banks in Asia are poised for a comeback as the global economy recovers. Share prices of some major banks have soared — some by more than 30% this year, and estimates from data analytics firm Refinitiv show further upside. Banks are among the so-called cyclical stocks that rise and fall as the economy rises or falls. They dropped out of favor over the past year as Covid-19 hit global growth, and as falling interest rates squeezed their margins. Here are the major Asian banking stocks — those with a market capitalization of above $10 billion — that have the most room to run, according to Refinitiv. Top winners with predicted gains of more than 20% include Chinese lenders Ping An Bank and Bank of Jiangsu, as well as the State Bank of India , according to analyst estimates compiled by Refinitiv. SOURCE: Refinitiv (Data as of March 24 close) The list also includes mega Chinese banks such as China Construction Bank , Agriculture Bank of China and Bank of China . Cyclical stocks as a whole still have room to run, said Sat Duhra, a portfolio manager for Janus Henderson Investors' Asia dividend income strategy. Duhra told CNBC's "Capital Connection" on Monday that investors have been shifting their money into cyclical stocks, including financials, as a global Covid vaccination campaign gets underway. "The rotation is very, very sharp and we think that that continues for some time longer," he said. "The valuations and, frankly, dividends of some of these names are still very attractive so I think the cyclicals will work for some time yet," he added. Asia banks with biggest year-to-date gains Japanese banks dominated the list of those with the biggest year-to-date gains, taking up five out of the top 10 spots. Profitability of Japanese banks have for years come under the pressure from persistently low interest rates at home. Large banks such as Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group have been more resilient, thanks in part to their ability to expand overseas. SOURCE: Refinitiv (Data as of March 24 close) Analysts from investment bank Jefferies said earnings of major Japanese banks will be more affected by overseas interest rates. They prefer large Japanese banks to their smaller peers. A steepening yield curve in the U.S. will benefit the major banks in Japan, but their earnings for this year and next year may not return to 2019 levels, said Jefferies.

A pedestrian looks at an electronic quotation board showing numbers of the Nikkei 225 index in Tokyo on September 11, 2020.

Kazuhiro Nogi | AFP | Getty Images

Big banks in Asia are poised for a comeback as the global economy recovers.

Share prices of some major banks have soared — some by more than 30% this year, and estimates from data analytics firm Refinitiv show further upside.

Banks are among the so-called cyclical stocks that rise and fall as the economy rises or falls. They dropped out of favor over the past year as Covid-19 hit global growth, and as falling interest rates squeezed their margins.

Here are the major Asian banking stocks — those with a market capitalization of above $10 billion — that have the most room to run, according to Refinitiv.