Some of the papers have looked at IG Group’s recent statement as either a) well done, or b) well done you have beaten your clients.
Our opinion is somewhere nearer the former. Of course you could argue that we are also biased towards IG and Spread Betting in general
IG provide a good service, they attract traders and they keep them trading. That is not Clean Financial’s opinion. That is the IG results talking. Yes they are the oldest spread betting company but that does not mean they should be, by default, the biggest. Just ask Yahoo.
So what have they done? What has led to record revenue and profit levels? 2,000 new IG Index spread betting accounts per month always helps.
Plus they offer a wide range of trading markets and options through spread bets, binary bets and contracts for difference (CFDs). All of which, depending upon how you price it up, means individual investors can gain exposure to a company’s share price more cheaply than if they bought the underlying share.
Steve Clutton, IG’s Finance Director, said “there is no sign that the beginnings of an economic downturn was deterring traders. Our typical client is not the first to feel the pinch in any kind of downturn.”
And what do you look like?
If you are the average trader with IG then you are a 37 year old man with circa £10,000 and £50,000 of disposable funds in the bank.
Should you bet on IG Group Shares?
Well, IG Group revealed a 40% increase in pre-tax profits to £99m for the year to May 31. Revenues were up 51% to £184 million. Naturally volatile markets are good for spread betting companies.
However, the share price dropped 12.6% to 305p as some analysts maintained their “hold” recommendation. Results were in line with expectations but profit taking was partly to blame for the fall. Daniel Havercroft of Investec, said: “The outlook statement is upbeat, with current trading remaining strong and the high levels of account growth...persisting. We do not envisage changing our future-year forecasts at this time and retain our Buy recommendation”.
Despite the FSA tightening up CFD disclosure rules in early July, Mr Clutton said the rules were unlikely to affect most IG customers as they do not take on such substantial exposure (any investor with a long CFD position of more than 3% is required to tell the market).
IG have also continued to expand overseas opening offices in France, Spain and the USA in the past year.
Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'IG Group Profits 2008' by DB, updated 25-Jul-08
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Risk Warning: Spread betting carries a high level of risk to your capital and you may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
* Tax law is subject to change or may differ if you pay tax in a jurisdiction other than the UK.
