Nomura Equity Research upgraded Malaysia banks to 'overweight',
citing their underperformance compared to other banks in the
Southeast Asian region and a likely removal of political
overhang post the upcoming elections.
"Investors fear a potential knee-jerk sell off once the
election is announced. We view such concerns as overdone," the
broker said in a report.
Nomura, which counts Malayan Banking Bhd and CIMB
Group Holdings Bhd as its large-cap picks for their
strong loan growth prospects, said it expects a re-rating of
these stocks once the overhang is lifted.
It maintained an 'overweight' rating on Thai banks on their
strong earnings growth, with an investment and corporate/small
and medium enterprise loan cycle coming through from a depressed
Nomura has a 'neutral' rating on Indonesian banks. It kept
its 'underweight' rating on Singapore banks citing their weak
earnings outlook and low profitability.
It also maintained its 'underweight' rating on Philippine
banks, citing high valuations and possible downside risks to
earnings given high levels of investment/forex gains and a
rising effective tax rate.
ASEAN economies are expected to post relatively strong
growth in 2013, helped in part by the government pump priming,
with ASEAN banks seen posting average earnings growth of 10
percent in 2013 and 15 percent in 2014, Nomura said.
(Reporting by Viparat Jantraprap in Bangkok; Editing by Bijoy