$200 billion that's hoarded overseas will return ... mostly to buy back shares, Goldman says

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Changes to tax policy will make U.S. companies bring money back into the country, but Goldman Sachs expects them to spend a lot of it buying back stock rather than making capital expenditures.

"We expect tax reform legislation under the Trump administration will encourage firms to repatriate $200 billion of overseas cash next year," David Kostin, chief U.S. equity strategist, said in a Friday note, referring to companies in the S&P 500. "A significant portion of returning funds will be directed to buybacks based on the pattern of the tax holiday in 2004."

The new rules should add $150 billion to buybacks, or about 20 percent of an expected $780 billion in such stock repurchases next year, the Goldman report said. That would mark the second time in 20 years for which buybacks will account for the largest share of total cash use by S&P 500 companies, the note said.