OAO Sberbank climbed to its highest level in 21 months and traded close to a record amid bets investors are switching from Turkish banks to Russia’s biggest lender and as it benefits from a stronger ruble.
The stock rose 1.1 percent to 107.75 rubles by the close in Moscow, the highest level since April 2011 and 4.42 rubles short of its 2007 peak. Turkiye Garanti Bankasi AS, Turkey’s largest bank, tumbled 5.2 percent to 8.82 lira. Sberbank has jumped 16 percent this year, while Garanti has declined 4.8 percent.
“There are two factors at work,” Julian Rimmer, a trader of Russian and Turkish stocks at CF Global Trading in London, said in e-mailed comments. “One is the strong ruble which has just broken through 30 versus the dollar and the second is the investor switch out of Turkish banks.”
Russia’s currency traded stronger than 30 rubles a dollar on Jan 25 for the first time since May. A stronger ruble discourages Russians from withdrawing and converting local-currency deposits, Sberbank’s main source of funding. The ruble weakened by less than 0.1 percent to 30.0600 per dollar today.
A report by Credit Suisse Group AG last week said the rally in Turkish banking stocks is ending. The nation’s gauge of lenders, which surged 65 percent in 2012, added 1.2 percent this year. Russian and Hungarian banks, especially Sberbank and OTP Bank Plc, are “preferred plays” in Europe, the Middle East and Africa, Ates Buldur, an analyst at Credit Suisse’s unit in Istanbul, said in an e-mailed report.
“International investors are selling Turkish bank stocks and transitioning into Sberbank,” Alex Debelov, chief investment officer at Moscow-based Third Rome LLC, which manages about $400 million in Russian assets, said by phone.
Russia’s Proxy Stock
Sberbank’s rise is a combination of it being “Russia’s proxy stock” and its domination of the country’s growing retail market, where it accounts for about 45 percent of all deposits, Tim McCarthy, senior portfolio manager at Valartis Asset Management in Geneva, said by phone.
“Sberbank has been my biggest holding for the past few months,” McCarthy, who oversees more than $1 billion in emerging markets said. “I can hold up to 10 percent of one stock and I have already gone to the limit.”
Moscow-based Sberbank, Europe’s fourth-largest lender by market capitalization, raised 159.3 billion rubles ($5.3 billion) in a London-Moscow secondary public offering in September last year. President Vladimir Putin called the lender’s stake sale one of the “most profitable in the last decade after Apple.” For every $100 the central bank invested in Sberbank ten years ago it received $3,700, Putin told reporters.
Moody’s Investors Service ended speculation of an imminent upgrade of Turkey’s credit rating, leaving it unchanged one step below investment grade. The nation’s current-account deficit is a “key area of risk,” it said in an updated credit opinion sent by e-mail on Jan. 28.