CMC Shares Crash As Stock Market Boom Ends
The extraordinary boom in stock trading by new investors may be over, as CMC Markets news suggests today, as its own stocks collapsed by a third.
The large-scale betting house founded and run by former Conservative Party Treasurer Peter Cruddas has had a superb run during the lockdown as new customers have emerged.
Across the industry, CMC and its competitors have seen punters use pandemic savings to open accounts and speculate in the markets.
Today, CMC cut its profit forecast for the year to between Â£ 250m and Â£ 280m, warning that “market activity remained subdued in July and August” after a slower first quarter.
That’s a significant drop from the Â£ 330million CMC pledged in July.
The statement continued, âThe reduced market volatility has resulted in a decline in trading activity for both the newly acquired and existing cohort of clients. Similar trends were observed in our non-leveraged and leveraged businesses. “
The news comes just weeks after Cruddas pocketed a Â£ 55million dividend on CMC’s skyrocketing profits. Once nicknamed the richest man in town, Cruddas, now Baron Cruddas, also recently donated Â£ 500,000 to the Conservative Party.
CMC shares slumped 117p, 28%, to 302p. Its big rival IG followed, albeit less dramatically, down from 58p to 887p.
Out of town, the flood of new investors rushing to buy stocks for short-term speculation and bet on bitcoin has raised concerns. The Financial Conduct Authority has issued stern warnings to the public, telling them they could lose all their money if they buy cryptocurrencies.
Cruddas was not speaking today, but has previously claimed that his new clients have a similar profile to his old ones – people who understand the risks they take, he insists.
Nevertheless, they are clearly less active as people return to offices, restaurants, pubs and shops.
Last month, Hargreaves Lansdown, another beneficiary of the stock trading boom, also warned that the surge was over.
Cruddas resigned as Conservative Party co-treasurer in June 2011 after a money scandal against access.