Be Selective When Buying Banks

Beleaguered financial stocks have been on a roll lately. Last week, executives from Citigroup

, Bank of America and JPMorgan Chase said their banks were profitable in the first two months of the year.

Financial stocks surged as investors held onto hopes, however faint, that struggling banks would be able to continue this good performance through to the end of the quarter, possibly the end of the year.

And on Thursday, the Federal Reserve gave investors more reason to cheer when it announced it would pump an extra $1 trillion into the U.S. economy. The rationale is simple - the Fed’s actions will likely keep interest rates low and unfreeze borrowing activity, which could be a huge help for banks.

Could this latest move be the push the financial sector needs to stage a turnaround? Lorraine Tan, Vice President of Equity Research at Standard & Poor’s Equity Research tells CNBC Asia Pacific's Protect Your Wealth, it's still too early to tell if the sector has bottomed out.

“We are probably of the viewpoint that there still is a bit of news to come out. I think the signals aren't all there yet to see a sustained rally yet … we are still watching out on the economic data side … the news is going to be coming out is still going to be more or less negative,” she says.

But this is not to mean that investors should avoid financial stocks completely. Tan says there are banks out there that have fared better in the current situation. S&P Equity Research has 'buy' calls on Morgan Stanley , Standard Chartered and Industrial and Conmmercial Bank of China.

If dabbling in banking stock still makes you feel uneasy, Tan recommends casting an eye towards sectors that are likely to benefit from global governments’ multi-billion dollars economic stimulus spending.

“We would, on the whole, position ourselves in some of the infrastructure sectors … it takes us back to some of the property stocks that really beaten down, particularly at this point in time, probably more of the basic materials like cement for example,” she explains.

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Catch "Protect Your Wealth" on CNBC's Asia Pacific network every Tuesday on "CNBC's Cash Flow," Wednesday on "Asia Squawk Box" and Thursday on "Capital Connection."