FNG Exclusive Analysis… The year 2020 will be remembered for a number of things, starting with the first global pandemic in over a century.
But from a purely financial perspective, 2020 will go down as another year in a decade-plus long bull market rally. When all the numbers are tallied for the year we see that the wide-ranging S&P500 index is up 16%, although other international indices didn’t do quite as well despite huge rallies from March’s COVID-driven lows.
One of the sectors which did really well in 2020, much better than the overall stock market, was Retail Forex. The handful of both large and small Retail and CFD brokers which are publicly traded companies saw their shares well up in 2020, from a 24% rise for IG Group (LON:IGG) to an amazing 609% leap for Hamburg, Germany based social trading focused broker NAGA Group (FRA:N4G), which now has a market value of more than USD $200 million.
On average, the shares of Retail FX brokers were up by 216% in 2020, although a more meaningful overall measure from a statistical point of view is probably the median return of 122%. Still, more than double. Taking into account that some of these companies pay out a nice dividend, the total return for Retail FX shareholders for 2020 is actually even higher.
In our Top FX industry news stories of 2020 article from earlier this week we reviewed how the COVID-19 pandemic – and the market mayhem that ensued after the virus went global in Q1 – revived the fortunes of a number of Retail FX brokers, large and small. Record market volatility across almost all financial instrument classes predictably led to record trading volumes at many brokers.
Equally as important from our perspective, and what sets the FX industry up nicely for 2021, was a record number of new client signups for individual brokers and the sector as a whole, especially as the equity market rally picked up steam all the way through the end of the year. The shutdown of sports betting activity during the first half of the year (as all major pro sports halted globally) seemed to lead a new generation of younger traders to FX brokers. When the stocks of the companies familiar to that generation started leading the charge in the second half of the year – Amazon, Tesla, Netflix, Zoom, Peloton… – the migration to online financial trading continued.
The question on many people’s minds remains though – will this phenomenal growth continue into 2021?
Well, it will be very hard to repeat 2020’s successes in the new year, but the FX industry is looking good due mainly to the “new lifeblood” brought in thanks to record new client signups in 2020. Shares of some of the publicly traded brokers – CMC Markets and Swissquote – are at or near all-time highs, reflecting the market’s optimism that the best is yet to come.
Some more data on the publicly traded Retail FX brokers in 2020:
|Share Price as of…||Mkt Cap|
|1-Jan||31-Dec||% change||(USD $M)|
Note that share prices are stated in the currency listed. Market Cap stats converted to USD.