Modest trading updates from IG Group & CMC Markets have dragged CFD provider stocks lower
Companies: CMCX, IGG, PLUS
Shares in the three major CFD providers fell further on Thursday after CMC Markets told investors that it expected FY17 net operating income to be below its FY16 total, despite increasing revenues.
The Group said active CFD and Spreadbet customer numbers had increased, and revenue had grown modestly in-line with previous years, but that operating income had fallen Yoy.
The update adds to the already bearish sentiments surrounding the three major CFD players, IG Group, CMC Markets, and Plus500, which started to fall last Wednesday following IG Group's trading update.
IG Group, the market leader, posted lower quarterly revenues Yoy blaming a quieter period in global financial markets leading to reduced activity from users. Last year, US election primaries and political instability elsewhere drove increased activity from users.
As a result, PLUS and IG have fallen more than 5%, with CMC falling nearly 10% in the past week. This is despite no new newsflow from Plus500 or the impending FCA investigation.
The sector has been the subject of an ongoing regulatory review by the FCA which is likely to impact revenues. When it was announced in December, it sent all three providers plummeting more than 30%.
However, IG stressed that regulatory changes had caused "uncertainty" but had yet to have any impact on the business, and today's update from CMC didn't suggest any impact, either.
In early trading, all three providers had fallen, with CMCX and PLUS trading down 2%.