"Upside surprises could be in store for banks if interest rates are driven up a lot faster than expected, and this could be positive for interest rate spreads and margins," UOB Kay Hian said.
The brokerage also recommended that investors look at property companies, especially those that have made aggressive moves to expand into regional markets. These included Keppel Land and CapitaLand, southeast Asia's biggest property developer, the brokerage said.
SEOUL
South Korean stocks will have to wait for the second half of 2005 before any meaningful pick-up as weak economic fundamentals keep investors in check until they see an improvement in private consumption, dealers said.
The KOSPI index opened at 821.26 points on January 2 and closed at 895.92 on Thursday, after a 720-936 range, for a gain of some 9.0 percent in the year.
Stocks should consolidate early next year as companies post weak results before rebounding to test the 1,000 points level in the second half, Korea Investment and Securities analysts Shin Dong-Seong and Park Si-Young said in a joint report.
Domestic consumption may pick up from the middle of the year when a government stimulus package should begin to take effect, they said.
"Market jitters over the feeble economy and weak corporate profits will peak early next year, possibly generating a shock but then a rally may emerge either late in the second quarter or in the third quarter," the report said.
Shin and Park said weak performances in key blue chips such as Samsung Electronics, the country's largest stock by market value, should begin to bottom out in the second quarter.
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