HONG KONG (BLOOMBERG) – While Asia’s equity rally may be ending the year looking a tad stretched, a bright earnings outlook for 2021 is giving strategists all the more reason to stay upbeat.

No less a trio than Citigroup, Goldman Sachs Group and Nomura Holdings have penciled in earnings growth of more than 20 per cent for Asian shares next year. Citi and Nomura are joined by Societe Generale in expectations for between a 5 per cent and 7 per cent rise in the MSCI Asia ex-Japan Index, while Goldman sees a 9 per cent jump in the Asia Pacific equivalent in 2021.

“We remain optimistic about 2021 prospects driven by the macro and earnings recovery and would be buyers of any market pullbacks,” a team of Goldman strategists including Timothy Moe wrote in a note published on Sunday.

Asian stocks are finishing an unprecedented year in strong fashion with the MSCI Asia ex-Japan erasing its pandemic-related losses in the summer and surging to a 18 per cent year-to-date rise through Monday (Dec 14). Benchmarks in technology-heavy South Korea and Taiwan have led the way.

For next year, the prospects for profit growth looks strongest in South Korea, Citi analysts including Robert Buckland wrote in a note last week, projecting a whopping 43 per cent jump in earnings-per-share growth for Korean stocks in 2021.

Sector-wise, earnings growth is shifting to cyclical sectors, such as materials and financials, SocGen analysts including Frank Benzimra wrote in a note published last month.

Further boosting returns in Asian equities next year will be expectations of an earnings recovery in 2022, according to Goldman.

“With strong market returns this year and full valuations, the market has priced next year’s earnings recovery: 2022 earnings will be the primary driver of 2021 returns,” the Goldman team wrote. It expects regional earnings to grow at 16 per cent that year.