Bank shares in Japan, Thailand and South Korea have all been beaten down as bad loans piled up in cooling economies. Tighter credit policies on property and equity lending announced by the central bank March 28 threaten to throttle earnings growth in the short-term. Investors also fear a rise in bad loans should a property bubble burst as it did in Thailand.
Analysts say the concerns are overdone.
He believes that the central bank's new credit guidelines, which include a limit on property lending to one-fifth of outstanding loans, would bring stability in the long run. Alina Chiew of Merrill Lynch agrees. Chiew views the sell-off as an opportunity to accumulate shares in banks specializing in manufacturing and trade finance. A top pick is Commerce Asset Holdings, parent of the Bank of Commerce. CAH focuses on corporate lending and trade financing.