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Top stock picks as Asia markets poised for rebound on strong earnings

People stand along Victoria Harbour in the Tsim Sha Tsui district in Hong Kong.

Justin Chin | Bloomberg | Getty Images

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Asia is expected to bounce back this year from the worst of the pandemic, and analysts are expecting earnings growth in the region to be stronger than the West.

Some have predicted that Asia’s earnings could jump by more than 20% this year.

Research firm Morningstar pointed out that investors have already piled into cyclical sectors triggered by positive vaccine news, ahead of stronger earnings this year which will likely boost Asian markets.

Cyclical stocks are those tied to the economic cycle, and they tend to have stronger performance when the economy improves.

With President-elect Joe Biden due to be sworn in this week, market uncertainty could be further reduced, the research house said, pointing out that Biden has been said to be more predictable in foreign policy.

Morningstar is bullish on three sectors, and names its top pick for each.