CIMB highest since July 2011, best proxy to ride on relief rally

KUALA LUMPUR: CIMB Group
rose to a high of RM8.60 - the highest since July 2011 -- on Tuesday as
it was viewed as the best proxy to rise on the relief rally after the
13th General Election.
At 10.46am, it was up 24 sen to RM8.59. There were 14.71 million shares done at prices ranging from RM8.40 to RM8.60.
The
FBM KLCI rose 13.24 points to 1,765.26. Turnover was 667.76 million
shares valued at RM920.29mil. There were 389 gainers, 152 losers and
203 counters unchanged.
On Monday, CIMB surged 74 sen to RM8.35 and added 12.70 points to the KLCI.
Alliance
Research said on Tuesday in line with its sector upgrade arising from
the subsiding external risks and domestic election uncertainties, it
raised its target price of CIMB from RM7.35 to RM8.66.
"Being a
laggard relative to its domestic banking peers in the past one year, we
believe that CIMB serves as the best proxy to ride on the expected
relief rally post 13th GE," it said.
To recap, the research house had late 2012 tactically downgraded its recommendation for the domestic banking sector to Neutral.
Alliance
Research said the reasons then were rising external uncertainties could
yield negative earnings surprises for banks with significant regional
footings; loan loss provision could creep up in 2013 should the
external headwinds persist.
Other factors then were also the
existence of high foreign shareholdings, which make the sector
vulnerable to foreign selling should domestic equity risk premium
heighten with the upcoming 13thGE.
"In view of subsiding
external risks coupled with the continued mandate given to the Barisan
Nasional in the 13th GE, we believe that the potential political
uncertainties arising from such event is fast dissipating. As such, we
are upgrading the domestic banking sector to Overweight,” it said.