KVB Kunlun Suffers Loss in Q1 2014 Due to Low Volatility in FX and Commodities

Income from leveraged foreign exchange and other trading instruments (CFDs) reached only HK$19 million for KVB in the first quarter

kvbkPublicly listed Asia-based brokerage KVB Kunlun Financial Group Limited released today its quarterly results for Q1 2014 showing a loss as the firm’s management expected last month.

Leveraged foreign exchange and other trading income reached only HK$19,328,000 for KVB in the first quarter of 2014, down about 20.4% compared with HK$24,273,000 for Q1 2013. KVB’s income from cash dealing increased by over a million HK$ during the same time period but was not enough to cover the reduced income from leveraged trading leading to an operating loss of HK$6.4 million.

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The quarterly results announcement also included a business review section that offers a look at the KVB management’s discussions and analysis of Q1 2014. Explaining the lower income compared with the previous year, the analysis states the company observed reduced volatility in the foreign exchange and commodity markets during the first three months in 2014.

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The price of gold, which is a favorite of Asia traders, mainly traded within a range for the first three months of 2014, compared with a sharp downward trend during the same period in 2013. The price of the EUR/USD was also less volatile in the first three months of 2014, compared with the movement in the same period in 2013. The highest and the lowest level of the EUR/USD were seen to be 1.3711 and 1.2750 respectively, a nearly 1,000-pip movement in the first quarter 2013, while the movement of the price in the first quarter 2014 only presented a 500-pip change.

Exact trading volumes were not provided by KVB but it was announced that the XAU/USD and the EUR/USD were the most popular trading pairs in both quarters, followed by the AUD/USD, GBP/USD and USD/JPY. Due to the lack of market momentum during the first quarter of 2014, a narrowed profit margin earned from the trading volume of the clients has been observed.

During the first quarter in 2014, KVB states it has taken moves to narrow the spread of most cross currency pairs. This move has successfully enhanced the trading experience of the clients of the firm, resulting in a marked increase in the amount of dollar trading volume for most non-JPY cross currency pairs.

Also mentioned in the announcement is that in March 2014, KVB launched a CHINA300 index contract for difference (CFD). This CFD product is said to be designed to meet the needs of the proportion of the clients who are interested in investing in the Chinese stock markets. In addition, the broker added another commodity under leveraged trading, copper CFD.

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