Standard Bank Pushes Banks Index to Record: Johannesburg Mover

The seven-member South African Banks Index reached a record as the outlook for stock gains in Russia and Turkey soured, according to RMB Morgan Stanley.

The index climbed as much as 3.8 percent and was trading 3.6 percent higher as of 3:18 p.m. in Johannesburg trading, heading for all-time closing high. The biggest gainers on the index, which has risen 2.6 percent this year, included Standard Bank Group Ltd., Africa’s largest lender, and Nedbank Group Ltd.

“Within the Europe, Middle East and Africa banks universe, South African banks rank as one of our most favored investment destinations this year,” Greg Saffy, a Johannesburg-based analyst with RMB Morgan Stanley, said in an e-mail today. A possible $70 billion of outflows from Russia and the outlook to Turkey may be driving gains, he said.

Russia, excluded from the Group of Eight, today canceled its fourth ruble bond auction in a row as the threat of tougher sanctions lifted borrowing costs. In Turkey, economists at banks including Goldman Sachs Group Inc. lowered their 2014 growth forecasts after the central bank raised interest rates.

South African banks all showed profit growth for the period ended in December and have more capital than regulators require, according to their financial statements.

Turkey’s 16-member banks index has dropped 5.3 percent this year. The country’s biggest bank, Turkiye Garanti Bankasi AS, has declined 4.3 percent in the period and trades at 9.3 times estimated earnings compared with Standard Bank’s estimated price-to-earnings ratio of 11.4 times.

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