Stability of markets fuels bets on the price of oil

IG Group, the spread betting firm founded by Conservative party benefactor Stuart Wheeler, said it had been taking more bets on oil price movements in recent months than on shifts in stock markets.

The switch to oil price speculation came after a lack of volatility in global stock markets, the company’s chief executive Nat Le Roux said.

“Spread betting volumes are vulnerable to a lack of volatility in financial markets, and for much of the past year world stock indices have been relatively subdued,” he added.

While global stock indices have been stilted in recent months, the price of oil has soared and dipped, providing the type of price volatility that spread betters love.

Individual shares, currencies and prices of commodities, such as oil and metals, accounted for a greater share of the group’s UK spread betting business during the year to March 31 than over the previous 12 months, IG said as it issued its first full-year results since returning to the stock market in May.

Outlining its full-year results for the year to May 31, London-based IG – which was originally established to enable UK residents to speculate on the price of gold – said it made pre-tax profits of £14 million, a 77 per cent improvement on a year ago.

IG, which also caters for sports speculators and those looking to gamble on other events, such as political elections, said turnover was up by 25 per cent to £62.3m.

And Mr Le Roux added: “Current trading is strong and the group is well placed to make further progress during the coming year.”

Brokers are forecasting profits of £42.1m for the current year.

In terms of customers, IG said it now had 26,102 account customers – representing a 23 per cent increase on the year before – and that more than 85 per cent of transactions were now conducted online.

When the group returned to the market it was initially valued at £393m. But its shares have proved a hit with investors and its market value has climbed to just under £500m.

About ten per cent of IG’s business comes from sports betting and this year’s haul of £6.8m marked a slight increase on 2004 despite being hit by a run of negative results over the year.

However, Mr Le Roux said: “In the long term it is volumes that matter and they’ve stayed good.”

Another area of IG’s business to see growth was in its binary financial betting operation, which offers fixed pay-outs on bets on stock or index price movements.

The operation, which currently does not face any competition, reported a 130 per cent rise in turnover to £5m.

IG said this year should see further progress through investment in its Australian business, the rebranding of the financial binaries business to make it easier to understand and a move into electronic exchange market making and Asian expansion.

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