Standard Bank: Rally ‘in danger of taking a breather’

A rally in Standard Bank is at risk of pausing after Africa’s biggest lender surged to a record in its best monthly gain since December 2012, according to RMB Morgan Stanley. Standard Bank has climbed 9.7 percent this year, the most in the JSE’s seven-member banks index after Barclays Africa Group. The gauge has risen 8.4 percent in the period, with Standard Bank reaching a record high of R143.70 on Tuesday before falling to R139.99 the next day. The stock gained 1.41 percent to R141.97 yesterday. “We now think it is time for a breather and believe that short-term gains could be limited,” Greg Saffy, a banks analyst at RMB Morgan Stanley, said on Wednesday. Future gains in the stock “still look promising and clients with a three- to five-year time horizon should still make money”, he said. Lenders, including FirstRand and Old Mutual’s Nedbank, have said profit growth will be constrained this year as consumers struggle to repay loans amid the slowest economic expansion since the 2009 recession, accelerating inflation and the first interest rate increase in more than five years. Standard Bank might pay a special dividend of R7 billion after selling units in Argentina, Russia, Turkey and the UK, Saffy said in a note dated March 17, when upgrading his recommendation to the equivalent of hold from sell. Standard Bank agreed to sell part of its global markets business in London to Industrial & Commercial Bank of China for about $765 million (R8bn). – Bloomberg