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The new year has started well for financial spread betting firm IG Group, which recorded a new 52 week high on Wednesday January 3 – its highest for more than a year. Barclays upgraded the target price to 920p from 650p, in a return to form for the group, who had been trading as low as 457p after being threatened with tighter regulations in 2016. The group also shrugged off a blip last month after tighter leverage limits were announced.
IG Group have benefited from the surge in fortunes of spread betting companies generally, after better than expected results reported by IG rival Plus500, as well as a boost to business from the Bitcoin craze over the last couple of months. This rally leaves the group’s shares valued just 20% less than their high back in 2016, a remarkable turnaround after that year’s slump. IG Group also gained by shrugging off fears that it could be exposed to losses following a Bitcoin crash, along with fellow spread betting companies, as it enlarged its crypto-currency trading offering to include Bitcoin Gold.
This move marks a major vote of confidence from the group in the crypto-currency market, in which it already offers Bitcoin and Ethereum, and comes after an indication that they will soon add Ripple trading and Litecoin to their roster. While the jump in the share price represents an impressive return to form for IG Group, the Barclays team have raised speculation that there are more rises in store.
They believe that the newly-level playing field created by last month’s changes to the spread betting leverage limits could allow the group to snap up business from weaker competitors. However, there is also the risk that the threat of further regulation could send smaller and more nimble rivals off-shore, where they would have a tax and regulatory advantage.
In the former case, in which regulation has a muted impact on clients, shares could climb as high as 1,175p – shattering the previous high. However, tighter regulations across the European and Asian markets could have a similar effect to the 2016 plunge in the worst case, with shares returning to their 475p valuation.
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