The Deutsche Bank AG (DB) common stock has appreciated significantly since our 4Q 08 and FY 2008 update report, reflecting positive investor reaction to a broad-based rise in global equity markets over the same period. Looking ahead, although the company has cut its exposure to toxic assets, we anticipate further writedowns in the coming quarters, particularly if the macroeconomic scenario deteriorates. ...

4Q 08 revenues were negatively impacted by significant losses in credit trading, equity derivatives and proprietary equities trading in the Sales and Trading (S&T;) unit. In response, DB has significantly reduced its proprietary trading activities and cut back its exposure to toxic assets. However, we expect ongoing weakness in global financial markets to continue to limit trading income through the near-tomedium term....

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Deutsche Bank AG’s (DB) common stock price rallied significantly on 28 January 2009 following speculation that the bank could earn up to €1 bn (US$1.3 bn) in pretax profit for the month of January 2009. In addition, investor hopes that the new US administration will establish a ‘bad bank’ to absorb toxic assets supported the global banking sector. However, considering current global market turmoil and the current price…