Goldman Sachs shares were lower early Monday morning, down 2.65%, after Malaysia filed criminal charges against the bank and two if its former executives over what the country called “grave violations” of its securities law relating to the $6.5 billion sovereign wealth fund 1MDB.
Goldman Sachs, one of the largest investment bank in the world, made about $600 million in fees after raising money for the fund, which is the subject of corruption and money-laundering investigations in at least six countries. Malaysia on Monday said $2.7 billion of the proceeds of three 1MDB bonds was misappropriated.
Monday’s selling has Goldman Sachs shares down almost 40% from their March peak of $275.31, at $168.20, and trading at their lowest level since October 2016, as a flattening yield curve and trade-war tensions have weighed.
Earlier this month, portions of the so-called yield curve, which compares short- and long-term bond yields, inverted for the first time since the financial crisis. That highlighted investor concerns that the US economy is in the final stages of its expansion. A flattening yield curve hurts banks’ profitability as it shrinks the spread between the rate at which banks borrow and the rate at which they lend.
In addition to the flattening yield curve, the recent stock-market volatility has been problematic for the investment banks, hurting their trading revenue as well as their fixed income and investment banking businesses. Citigroup and JPMorgan are among the banks that have already warned on the current environment.
Goldman Sachs was down 32.18% this year through Friday.
Source: Markets Insider