CIMB  Investment  Bank  announced  that  it  has  signed  an  agreement  with Kepler Cheuvreux to cross-distribute equity research in  both the Asia and European markets. Under the collaboration, there will be the creation of a single global programme trading platform where both entities will leverage on  each  other’s  strengths.  Though  the  co-operation  agreement  revolves around  equities,  the  partnership  could  also  be  extended  to  other  areas such as equity capital markets, M&As, retail and private-banking. (Source: TheEdge Financial Daily)

Comments:  In our view, the challenging outlook in 2015 does not appear compelling for the capital markets, though we agree that the collaboration creates  a  lean  and  efficient  structure  to  reach  clients  in  each  other’s regions. At this juncture, we are also reviewing our  SELL  rating on CIMB Group, given our price target of RM5.50  (based on an implied P/BV target of 1.0x). We believe that the banking sector earnings recovery is expected to be led by the CIMB Group on the back of lower credit costs and costcutting  initiatives  (under  T18)  –  2H2015  will  be  an  inflection  point.  Key upside  risks:  i)  cost  savings  above  our  expectations;  ii)  turnaround  in capital and financing markets.

Source: Affin Hwang Capital Research - 29 Jun 2015