Market turmoil drives record business for IG
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Tuesday 23 August 2011
The spread betting group IG has emerged as a winner of the recent market turmoil, with stock market volatility boosting the FTSE 250-listed company's sales.
The market swings led to an increase in volumes, as traders and investors rushed to move their money about. This in turn drove business for IG, which said yesterday it had seen "record levels of client activity in the recent market volatility despite it being holiday season" in most of its territories.
The result is that the spread betting group now expects revenues in the three months to the end of August to climb to more than £94m, significantly above the £79m seen in the same period last year.
"This would represent growth of at least 19 per cent," IG said, adding that, at the same time, its "credit management processes have proved robust and it is anticipated that the doubtful debt charge for the quarter will be less than 1 per cent of revenues."
The recent volatility has seen London's FTSE 100 index go from closing highs of above 6,000 as recently as early July followed by lows around the 5,000-point mark.
That was followed another rally of more than 300 points before the index retraced its steps south last week. Along the way, investors have witnessed sharp gyrations that have threatened to push the blue chip index into bear market territory. Similar movements have been seen in markets around the world, driving volumes for spread betting companies like IG.
Analysts welcomed the update, with James Hollins at Evolution Securities saying that investors should focus on the "stellar" trading result and not worry about recent German and French plans to impose an EU-wide financial transactions tax – something that could hit companies like IG.
German Chancellor Angela Merkel and French President Nicolas Sarkozy mooted the idea last week as they attempted to solve Europe's debt problems.
But Mr Hollins played down the prospect, noting opposition was "too great, notably from the UK".
"We do not think the German/French proposed EU financial transactions tax will be introduced anytime soon and, further, IG could potentially take action to negate the tax," he said. "We therefore urge investors to focus on stellar current trading and the group's existing ongoing augmentation of its market share in the core markets of the UK and Australia."
Andrew Mitchell at Charles Stanley also noted the "pro-volatility" nature of the business. "A concern must remain that activity freezes if we return to deeper financial crisis but, absent this, continued market volatility should be helpful for revenues and deliver better than estimated margins and earnings," he said.
Is your name now 'banned' in Saudi Arabia?
Oscar Pistorius trial: Photographs of Paralympian splattered in blood shown in court
Seth Rogen compiles list of all the celebrities he’s got high with
Missing Malaysia Airlines Flight MH370: Satellite ‘pings sent five hours after contact was lost' the only clue in hunt for £160m plane
Missing Malaysia Airlines Flight MH370: Plane's communications were deliberately disabled says prime minister Razak as new radar evidence points to hijacking
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
Fracking is turning the US into a bigger oil producer than Saudi Arabia
The rise of Ukip: Study warns Labour that Eurosceptic party's electoral base now 'more working class than any of the main parties'
- 1 Is your name now 'banned' in Saudi Arabia?
- 2 Best films on Netflix: 32 movies that will put an end to your scrolling
- 3 Saving a crushed egg with tape and glue: Why you should care about the kakapo
- 4 Istanbul protesters take 'Ellen selfie' from the back of a police van
- 5 Lady Gaga has struggled with eating disorders in the past, so it's indefensible that she's glamourising bulimia in her SXSW set
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...