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Goldman (GS) Eyes Latin America Expansion With More Hirings

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After a record year in Latin America, Goldman Sachs Group Inc. (GS - Free Report) is in “growth mode” in the region and plans additional hirings in areas like equity research, sales, trading and derivatives, per a Bloomberg article.

Besides a record year in asset management, global markets and investment banking have driven the company’s revenues in Latin America. Goldman has been witnessing continued growth in the region with revenues up around 60% in the past five years, compared with the five years before that.

Goldman has also sold stakes in firms including Oncoclinicas do Brasil Servicos Medicos SA. In June 2021, the company started operating its stock broker-dealer in Mexico, and hired 40 engineers in Brazil to support the Americas’ emerging markets and equity-derivatives businesses, thereby “building a bigger engineering hub in Brazil.”

Aasem Khalil, co-head of Latin America for Goldman, said in an interview, “We want to continue to invest in equity capital markets in particular.”

Per the article, $33.5 billion of stock was issued by Latin American firms in 2021 (including initial public offerings and secondary share sales). This indicated an increase of 2.6% year over year. Goldman upped its position to the sixth rank in deal making from 11th in 2020. Also, with an aggregate of 500 employees in Sao Paulo, Santiago, Lima, Buenos Aires and Mexico City, Goldman was the fifth-largest underwriter of global bonds from Latin American issuers in 2021.

Hence, to further strengthen its foothold in the region and gain market share, the company is now planning to recruit more coverage bankers and executives for equity capital markets.

Khalil remarked, “In Latin America, we have the same obsession about league-table rankings, although our aspirations are slightly different: We are really looking to be the best international bank in the region, and not trying to compete with some of the biggest local banks on the ground.”

The company also remains focused on “electronification of Latin America in market-making activities” aimed to offer more services and reduce transaction costs for clients.

Our Take

Goldman’s expansion plans in Latin America are expected to help offset some of the adverse impacts that market normalization in the Fixed Income, Currency and Commodities business has been weighing on its top line.

The expansion plans, despite prospects of slower economic growth and higher market volatility in Brazil, indicate management’s confidence in the region’s growth.

Over the past year, shares of Goldman have rallied 36.8% compared with the industry’s growth of 26%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Currently, Goldman carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks Worth a Look

Some other stocks from the same space include Cowen Group (COWN - Free Report) , Moelis & Company (MC - Free Report) and Morgan Stanley (MS - Free Report) , each carrying a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Cowen’s 2022 earnings has been unrevised over the past 30 days. Cowen’s shares have risen 27.7% in the past year.

Earnings estimates for Moelis & Company have been revised 1.1% upward for 2022 over the past 30 days. Over the past year, MC’s shares have rallied 20.3%.

Earnings estimates for Morgan Stanley have been revised marginally upwardfor 2022 over the past seven days. The MS stock has rallied 37.4% in the past year.