Publicly listed Asia-based brokerage KVB Kunlun Financial Group Limited today announced that it expects to post a net loss for the first quarter of 2014, and cited the decrease as attributable mainly to a reduction in leverage for its foreign exchange business, and other lowered trading income levels from external customers due to lower market volatility.
Brokers are increasingly at the mercy of market volatility as volumes and the associated fees earned from trading are tightly correlated, and something that some company’s strive to gauge or forecast (such as when markets are trending or approaching long-term technical levels where a reversal or breakout could increase volatility) in order to anticipate the effects of these conditions, in Forex Magnates opinion. However, sometimes unforeseen geo-political events, such as the unfolding of events in Ukraine, can come unexpected and hinder risk appetite for investors.
A reduction of leverage however, has a clear impact on both brokers and clients’ ability to speculate for higher risk/reward returns. For KVB its offering includes providing clients access to 32 currency trading pairs, 4 indices and 5 commodities, from offices in Sydney, Melbourne, Auckland and Hong Kong.
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KVB Kunlun is headquartered in Hong Kong, and listed on Hong Kong Exchanges and Clearing Limited (HKEx), and the news today from the company originated from a preliminary review by the company’s board of directors of its un-audited management accounts of the group, including its subsidiaries, as per the official press release.
In addition, the expected loss was partially blamed on the expenditure of a significant amount of marketing expenses that the company realized in order to enhance its corporate image, for branding and business development purposes, during the first quarter, as well as expenses the group incurred in relation to the granting of share options of the Company pursuant to its share option scheme of January 10, 2014.
The unaudited first quarterly results announcement of the Group for the three months ended 31 March 2014 is expected to be published on or about 5 May 2014. The update follows Forex Magnates coverage of the company’s 2013 results after it reported a solid year. The company has a market capitalization of nearly 820 million Hong Kong Dollars (HKD) , and shares of KVB Kunlun were little changed today on the HKEx, and have been trading within a range over the last 6 months, as seen in the chart below: