IG Group Share Price Up 3.51% Year On Year

Poor Final Quarter Performance for IG Group Holdings plc (IGG) in 2014!   

The IG Group (IGG) recently published its pre-close trading update for shareholders. The final quarter (Q4) for the IG Group reflected what analysts have best described as subdued growth. This news follows on the heels of the Interim Management Strategy report published in March 2014. Based on the actual figures, the last 3 months from the period February 28th 2014 through May 27th 2014 reflected a drop in the share price of 38.56 or 6.11%. The steep slide in the share price began on May 13th 2014 when the price was 641.50 with a trading volume of 367.69K. By May 27th 2014, the price of IG Group Holdings plc dropped to 592.00. During 2014, the highest price was recorded on February 25th at 652.50 with a trading volume of 773.68K. Management at the IG Group (IGG) feels that the revenues are below expectations, but they are generally satisfied with the cash, profit and earnings generated. 

Why IG Group (IGG) Performance is Below Expectations

The IG Group (IGG) appears to be suffering from the same symptoms as the forex market in general. What has been happening lately is that that there is low volatility in the currency trading markets. With interest rates at historical lows and emerging market economies showing some steel, there is very little in terms of ups and downs in the FX markets that will allow for greater profits. During times of low volatility, traders have to trade within much tighter trading ranges – with all their spreadbetting and FX trading. Since lower volatility means lower fluctuations, traders then have to take on additional risks by engaging in high volume trades to make the equivalent profits they did make during times of higher volatility. However, all is not lost for IG (IGG) since they have been able to rein in their operating costs. This has had the effect of mitigating the overall losses due to subdued trading. With lower costs, the lower revenues have had less of an impact, although the end-of-year figures are not entirely encouraging. The main fact that led to lower volatility in the forex markets was the fact that major central banks are maintaining near-zero interest rates. The cost of capital is influenced strongly by the rate of return via the interest rates. As currency FX rates move, traders can maximise profits by fluctuations in the market and carry trades. It’s interesting to note that the IG Group (IGG) cited the same volatility for poor performance in January 2014 when they discussed the drop in their first half year revenue.

About the IG Group (IGG)

IG Group Holdings plc IGG, a leading company in online trading with access to an estimated 10,000 markets (binaries, commodities, indices, forex and shares), was established in 1974 in the UK. It quickly became one of the leading global authorities in financial spread betting and serves millions of active traders around the world. Among others, users can enjoy CFDs and forex trading. The IG Group is listed on the FTSE 250 and sports offices across the US, Asia, Europe and Africa. As a major spreadbetting provider, the IG Group makes it possible for traders to trade on price movements of thousands of commodities, indices, shares, currencies and more. It provides for easy speculation on prices movements regardless of whether the market is falling or rising.

This article was contributed by Alexandra Grey from Spread Betting Review