It has been a tough week for shares of retail forex brokers.
With the backdrop of heavy volatility in the financial markets (mostly in the down direction), shares of some of the better known names among the publicly traded retail forex brokers have also taken a battering.
In the US, Forex.com parent Gain Capital Holdings Inc (NYSE:GCAP) saw its shares drop to a new 52 week low of $6.63 before closing at $6.72 – down 8% on the day and off more than 17% so far in January.
Across the pond in the UK, London Capital Group Holdings plc (LON:LCG) has shed 22% of its value in the past two trading days (Tuesday and Wednesday). At 8 pence, LCG shares are at a 52 week (and all-time) low. The unexplained sudden drop (see more on that below) comes just a week after LeapRate broke exclusive news of London Capital Group’s rebranding as LCG, alongside a new website, logo and platform.
Ironically, we believe that January is shaping up as (another) strong month for most retail forex brokers, who typically thrive on volatility. More volatility = more interested traders = more volumes. Gain Capital’s most recent volumes report was a strong one, with December retail volumes up 21% MoM.
So what is to blame?
Nothing, really. A senior source at LCG indicated to LeapRate that they know of no material reason for the decline. Not a perfect explanation, but we believe that in this environment in which stock market investors are clearly very nervous a lot of shares are being dumped, whatever the individual company’s fundamentals are.
So where do we go from here? Stay tuned to LeapRate…