Royal Bank of Canada, the country’s largest lender and company, climbed to a market value of more than C$100 billion ($97.1 billion) as its share price hit a record.
Royal Bank advanced 1.2 percent to close at C$69.53 in Toronto, a record high for the Toronto-based lender, according to data compiled by Bloomberg. The gain took its market value to C$100.1 billion, making it the country’s first bank to break that mark.
Toronto-Dominion Bank, Bank of Nova Scotia and National Bank of Canada also traded at record highs while Bank of Montreal is approaching its April 2007 peak. The eight-company Standard & Poor’s/TSX Commercial Banks Index is also at a record high, surging 16 percent since June 20.
Bank stocks, which have been undervalued compared with other Canadian companies, are getting a lift from good housing data, according Peter Routledge, a National Bank Financial analyst.
“The summer housing market put people’s concerns at ease, at least for now, and you’ve seen valuations get back to where they should be given where lifecos and consumer companies are trading,” Routledge said today in an interview. “It’s a revaluation trade.”
Canadian home sales rose 0.8 percent in September from August, with average prices up 1.4 percent during the month, the Canadian Real Estate Association said in an Oct. 15 statement. Toronto and Vancouver, Canada’s two priciest property markets, helped lift housing sales to its seventh straight monthly gain. Housing starts also rose 5.3 percent last month, led by construction of multiple-unit projects such as condominiums, the Ottawa-based Canada Mortgage & Housing Corp. said Oct. 8.
The surge of bank shares probably won’t continue because of slowing credit growth in Canada and the U.S., Routledge said.
“This rally, in my opinion, will be short lived,” he said. “Enjoy it while it lasts.”