HSBC, Standard Chartered among top bank share gainers in Asia on reflation bets

New York

HSBC and Standard Chartered's Hong Kong shares are among top gainers of bank stocks across the region on optimism that faster economic growth and higher interest rates will stoke profits.

HSBC shares jumped as much as 6.9 per cent, while Standard Chartered gained 6.3 per cent on Tuesday after a two-day market close. The MSCI AC Asia Pacific Financials Index rose nearly one per cent, to its highest level since June 2018 and on course for an eighth straight day of gains.

"Cyclical stocks, particularly the financial sector, can be seen riding the wave of rising yields going into the Tuesday session," said Pan Jingyi, a market strategist at IG Asia.

A significant slowdown in virus cases and progress on vaccine roll-outs have boosted the prospect of a pickup in global growth. US Treasuries breached key levels this week as a global debt sell-off sent yields to their highest in about a year. Rock-bottom interest rates have weighed on bank earnings, even as central bank stimulus measures have boosted markets and liquidity.

HSBC and Standard Chartered are both due to report their earnings next week and investors are optimistic about the resumption of dividends.

In Japan, the biggest banks have climbed at least 20 per cent this year, almost erasing losses in 2020 triggered by the pandemic.

"Banks/financials generally do well when market rates rise - which they have been recently - on global reflation expectations," said Chetan Seth, Asia-Pacific equity strategist at Nomura Holdings. BLOOMBERG