Johannesburg - 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 3.3 percent and was trading 3 percent higher at 58,883 points as of 1:39 p.m. in Johannesburg trading, the highest level on record on a closing basis.

The biggest gainers on the index, which has risen 2 percent this year, included Finbond Group Ltd. and Standard Bank Group Ltd., Africa’s largest lender.

“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. - Bloomberg News