Goldman Plans Expansion in Mexico With Stock Brokerage

(Bloomberg) -- Goldman Sachs Group Inc. is planning to open a stock-trading brokerage in Mexico as it boosts its presence in Latin America’s second-largest economy.

The move will allow the firm to buy and sell stocks locally on behalf of clients, according to people with knowledge of the matter. The new business line, still months away from being up and running, would give Goldman a bigger role in a market where some of its larger U.S. banking rivals already offer full-service stock brokerages.

A Goldman spokesman declined to comment on the plan.

Goldman already had a license to carry out fixed-income trades in Mexico, a business it’s been operating for the past few years, and plans to expand the platform into equities. A fully functional stock brokerage in Mexico could also bolster Goldman’s effort to handle more initial public offerings, with the ability to provide liquidity following the IPOs.

“The companies that are issuing stock want the local investors to be able to buy that stock,” said Larry Tabb, founder of Tabb Group LLC, a New York-based firm that analyzes the structure of financial markets. “If you don’t trade their stock, it’s one more challenge in terms of getting the underwriting business.”

Investing in Mexico can prove challenging -- especially in 2019. Many in the business community have been on edge since Andres Manuel Lopez Obrador was elected president last July on a populist platform. Earlier this month, his administration cut the 2019 growth estimate for Mexico -- the region’s biggest economy after Brazil -- to 1.1 percent to 2.1 percent from 1.5 percent to 2.5 percent.

Read more: Santander to raise up to $2.9 billion to buy Mexico stake

Last month, Goldman expanded Carlos Fernandez-Aller’s role to include co-leading the equities-trading group in Latin America, according to an internal announcement. He already runs the region’s fixed-income trading group and will hold on to that title. The aim is to more closely align the teams handling equities, bonds, currencies and commodities in the Latin American franchise, according to the memo.

To contact the reporters on this story: Sridhar Natarajan in New York at snatarajan15@bloomberg.net;Michelle F. Davis in New York at mdavis194@bloomberg.net

To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Daniel Taub, Steve Dickson

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