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Screenshot of a breaking news alert e-mail from Q2 2017
Hong Kong Forex retail forex broker KVB Kunlun Financial Group Ltd (HKG:8077) has issued a statement warning investors that it expects to report a loss for the first quarter of 2017.
Profit (or more accurately, loss) warnings have become something of a bad habit lately at KVB. For the company, controlled by China’s CITIC Securities Company Limited (SHA:600030), this marks three warning quarters in a row after KVB issued profit warnings for the full year 2016, and for nine months 2016.
This time around, KVB blamed the not-yet-reported loss on:
(i) the decrease in leveraged foreign exchange and other trading income mainly resulted from the low market volatility;
(ii) the increase in referral fee and other charges mainly caused by the increased commission rebate to external parties (including margin business and PRC operations); and
(iii) the increase in administrative expenses mainly due to increased marketing expenses, regulatory and compliance expenses, computer services expense and customer promotion expenses as the Group expanded its business operation.
While we are still waiting on Q1 results for many of the world’s leading Forex brokers, initial indications are that Q1 volumes were fairly strong, including record volumes seen in March as some leading eFX venues. So, a better explanation for KVB’s problems is probably just overspending and lack of execution.
KVB’s full profit warning for Q1-2017 can be seen here (pdf).