SINGAPORE (May 3): CIMB is downgrading the banking sector to “neutral” from “overweight” as valuations have recovered.

Since the trough in Feb, the banks have gained 15% since the trough in Feb, outperforming the STI as the recovery in oil price eased concerns on exposure to the commodities sector.

“We think this is a good time to trim exposure, especially in view of earnings headwinds from a slowing topline and rising costs. We downgrade our sector weighting from Overweight to Neutral,” says lead analyst Kenneth Ng in a Tuesday report.

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