B
Black Swan
Growing numbers of gamblers keen for a flutter in the recent volatile markets have boosted revenues at IG Group, driving up shares in the spreadbetting company.
The FTSE 250 group on Monday said that the summer holiday period had failed to deter customers from gambling on market activity, pushing up client activity to record levels.
London-based IG said the higher levels of gambling had prompted the spreadbetting company to buoy its expected revenues for the quarter to August 31 by at least 19 per cent to £94m. This compares with revenues of £79.1m in the same period last year, IG said.
Shares in IG, which has operations in 15 countries including Australia, Singapore, China and the US, responded to the news by rising by 4.3 per cent, or 17p, to 410.6p in early London trading.
Financial spreadbetting – where punters can gamble on fluctuations in the price of commonly-traded assets including currencies, commodities and stocks – has the advantage of gains being free from tax, but is potentially higher risk as investors can lose more than their initial stake.
Spreadbetting groups such as IG, City Index and CMC Markets benefited from the growing popularity of smartphones, which allow customers to gamble while away from the office or home.
The groups have launched apps for iPhones, BlackBerrys and Google Android phones, as well as apps for tablets such as Apple’s iPad.
James Hollins, an analyst at Evolution Securities, said it was premature to raise his full-year estimates on the group, but retained his “buy” recommendation on the shares.
“The stock has been weak recently, principally based on the threat of the introduction of a European Union financial transactions tax,” Mr Hollins said.
“We do not think the German/French proposed EU financial transactions tax will be introduced any time soon and, further, IG could potentially take action to negate the tax.”
The stronger revenues at IG will come as welcome news after the spreadbetting group was earlier this year hit by a £4m levy as part of the cost of compensating investors who lost money in the collapse of Keydata, the specialist UK investment firm.
The £4m levy was IG’s share of a £326m levy required of financial services groups by the Financial Services Compensation Scheme to fund compensation claims from customers of defaulting investment firms.
Nearly 30,000 investors were left out of pocket when Keydata went into administration in 2009. However the £326m levy on the investment industry was so large the FSCS had to pass most of the costs on to fund managers.
Last month IG reported full-year results in line with expectations, with net trading revenue up 7.3 per cent to £320.4m, but pre-tax profit fell from £140.3m to just £7m after it took a £143m write-off relating to its Japanese business in January.
http://www.ft.com/cms/s/0/49e7cfc8-cc91-11e0-b923-00144feabdc0.html#axzz1VlByQ8sq
The FTSE 250 group on Monday said that the summer holiday period had failed to deter customers from gambling on market activity, pushing up client activity to record levels.
London-based IG said the higher levels of gambling had prompted the spreadbetting company to buoy its expected revenues for the quarter to August 31 by at least 19 per cent to £94m. This compares with revenues of £79.1m in the same period last year, IG said.
Shares in IG, which has operations in 15 countries including Australia, Singapore, China and the US, responded to the news by rising by 4.3 per cent, or 17p, to 410.6p in early London trading.
Financial spreadbetting – where punters can gamble on fluctuations in the price of commonly-traded assets including currencies, commodities and stocks – has the advantage of gains being free from tax, but is potentially higher risk as investors can lose more than their initial stake.
Spreadbetting groups such as IG, City Index and CMC Markets benefited from the growing popularity of smartphones, which allow customers to gamble while away from the office or home.
The groups have launched apps for iPhones, BlackBerrys and Google Android phones, as well as apps for tablets such as Apple’s iPad.
James Hollins, an analyst at Evolution Securities, said it was premature to raise his full-year estimates on the group, but retained his “buy” recommendation on the shares.
“The stock has been weak recently, principally based on the threat of the introduction of a European Union financial transactions tax,” Mr Hollins said.
“We do not think the German/French proposed EU financial transactions tax will be introduced any time soon and, further, IG could potentially take action to negate the tax.”
The stronger revenues at IG will come as welcome news after the spreadbetting group was earlier this year hit by a £4m levy as part of the cost of compensating investors who lost money in the collapse of Keydata, the specialist UK investment firm.
The £4m levy was IG’s share of a £326m levy required of financial services groups by the Financial Services Compensation Scheme to fund compensation claims from customers of defaulting investment firms.
Nearly 30,000 investors were left out of pocket when Keydata went into administration in 2009. However the £326m levy on the investment industry was so large the FSCS had to pass most of the costs on to fund managers.
Last month IG reported full-year results in line with expectations, with net trading revenue up 7.3 per cent to £320.4m, but pre-tax profit fell from £140.3m to just £7m after it took a £143m write-off relating to its Japanese business in January.
http://www.ft.com/cms/s/0/49e7cfc8-cc91-11e0-b923-00144feabdc0.html#axzz1VlByQ8sq
