IG Group - hit by regulation

Tuesday, 22nd January 2019 08:44 - by Rajan Dhall

IG Group today released their interim statement for the six months ended 30 November 2018. Things are not looking great for the sector as a whole and this reflected in the results.

• Net trading revenue £251.0 million (H1 FY18: £268.4 million) - down 6%
• Operating expenses excluding variable remuneration £122.1 million (H1 FY18: £117.6 million) - up 4%
• Operating profit £112.5 million (H1 FY18: £136.5 million) - down 18%
• Own funds generated from operations £100.1 million - 89% of operating profit
• Basic EPS 24.9 pence (H1 FY18: 29.5 pence) - down 16%

Having said we need to look at how much of the bearishness is priced into the market. I do believe that the share price will fall off the back of the news and have plotted support levels accordingly. IG have a solid business and longer term could bounce back from lower levels like the 500p psychological level. Macroeconomic factors will also have an effect on this company's revenues as traditionally volatility creates revenues for spread betters. All-in-all I believe there is some pain in the short term and longer term we could see a bounce back.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.