In what may be a delayed reaction to the release of the final draft of the new Volcker rules yesterday, shares of Goldman Sachs (GS) have dropped today, joining Morgan Stanley (MS) JPMorgan Chase (JPM) and Bank of America (BAC) in the red.
Bloomberg News But how bad will the Volcker rule really be? Not as bad as it could have been, says Susquehanna’s Doug Sipkin. He writes:
The most notable positives to us were permission to continue to trade sovereign bonds for proprietary purposes, permission to invest in non-covered entities such as wholly owned subsidiaries, joint ventures, and acquisition vehicles such as business development companies, and the ability to hedge risk related to individual as well as aggregated positions of the banking entity. The timeline is also a positive. The rules become effective April 1, 2014 and the conformance period starts on July 21, 2015. Within our space, [Goldman Sachs] followed by [Morgan Stanley] are most impacted by the rule.
Investors shouldn’t underestimate the ability of Goldman Sachs to turn a profit, Sipkin says. He writes:
Despite some adverse consequences from the rule, we still believe GS can generate reasonable long-term returns driven by greater capital efficiency, potential wider bid-ask spreads, and leading positioning within investment banking. We believe 4Q13 will likely serve as some indication as it looks as if GS is beginning to execute on its best banking pipeline in five years driven by a torrid pace of equity issuance in the quarter. Year-to-date, GS has 11.8% share of equity issuance, up from 8% during the same
period in 2012. The equity business in 4Q13 is likely seeing its best quarter since prior to the credit crisis.
Goldman Sachs has dropped 1.2% to $167.79 at 3:12 p.m., while Morgan Stanley has fallen 1.7% to $30.24, JPMorgan has declined 0.9% to $56.17 and Bank of America is off 2.2% at $15.23.
No comments:
Post a Comment