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Goldman (GS) May File for Equities License in Saudi Arabia

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Goldman Sachs Group Inc. (GS - Free Report) has been involved in the preliminary discussions with the Capital Markets Authorities for acquiring an equities license in Saudi Arabia. The company is considering this with plans to take advantage of the country’s economic reforms.

As of now, neither any formal application has been filed with the authorities nor have any comments been made by the representatives of Goldman Sachs. There are chances that the bank might decide not to move forward with the application.

Lately, Saudi Arabia has been emerging as a lucrative opportunity for the banks due to its steps to revive the domestic economy. It has plans to make Saudi Arabian Oil Co. a stock exchange listed entity through initial public offering.

This is expected to be the largest initial public offering ever. Also, Saudi Arabia’s stock exchange is considered to be largest in the Arab world with a total market capitalization of about $429 billion (1.61 trillion riyals).

Since 2008, Goldman Sachs has been involved in commercial activities in Saudi Arabia. It is eligible to provide asset management services to institutions and companies, and also advise on corporate finance transactions in the country.

After the country authorized foreign investment in 2015, some of the other banks to have acquired equities license were HSBC Holdings Plc (HSBC - Free Report) , Citigroup Inc. (C - Free Report) and Ashmore Group Plc.

Our Viewpoint

We expect to see a boost in Goldman’s activities if it acquires the license. The bank’s ongoing capital deployment activities signify its capital strength.

However, its dependence on the overseas markets along with exposure to the political and regional economies keep us apprehensive.

Over the last six months, shares of Goldman Sachs increased 39.8% compared with 31.4% gain for the Zacks Categorized Financial-investment bank industry.



Currently, Goldman Sachs has a Zacks Rank #3 (Hold). A better-ranked stock in the finance space is Raymond James Financial, Inc. (RJF - Free Report) .

Raymond James’ current-year earnings estimates were revised 3.1% upward, over the last 30 days. Further, its share price gained 58.7%, in the last one year. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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