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Deep discount lures buyers to SA banks despite junk

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Johannesburg - Foreign investors have been snapping up South African banking stocks, enticed by the cheapest valuations relative to emerging-market peers since 2011, even as the country’s downgrade to junk deepened a broad equity selloff.

Offshore investors bought a net R1.5bn of bank shares, including those of FirstRand [JSE:FSR] and Barclays Africa [JSE:BGA], in the six days after S&P Global Ratings downgraded the South Africa’s foreign currency debt on April 3.

Fitch Ratings followed with a similar cut on April 7, described by a banking industry body as “ devastating” for lenders. Excluding bank shares, foreigners sold a net R2bn of other stocks in the same period, bringing equity outflows this year to R43.8bn, according to JSE data.

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