The broker, formerly known as KVB Kunlun, says the loss reflects a reduction in leveraged Forex and other trading income earned from external customers.
Hong Kong-focused retail Forex broker CLSA Premium Ltd (HKG:6877), formerly known as KVB Kunlun Financial Group, today issued aprofit warningfor the year to end-December 2019.
The board of directors of the company notes that, based on the preliminary review of the latest unaudited consolidated management accounts of CLSA Premium, for the year ended December 31, 2019, it is expected that the Group will incur a substantial loss for 2019 as compared to the net profit for the year ended December 31, 2018.
The Board attributes the loss to a variety of factors, such as a reduction in leveraged foreign exchange and other trading income earned from external customers due to a sharp decline in the number of customers and reduced volatility in foreign exchanges, which led to decrease in trading volume of the Groups customers in 2019.
The Board also notes that regulatory authorities in different regions, including Australia and Hong Kong, tightened the regulations on leveraged foreign exchange trading, which led to investors restructuring of their investment portfolios in the relevant year.
Finally, CLSA Premium says that the global economy has entered a synchronized slowdown during 2019, which affected investors attitude towards investment in leveraged FX and commodity products.
Lets recall that KVB Kunlunchanged its nameto CLSA Premium in December 2019. Back in September, explaining the rationale for the name change, the Board said the new name will better reflect the fact that KVB Kunlun is part of the substantial shareholders group of entities, including CLSA group. Furthermore, the Board believes that the new name will provide the company with a fresh corporate image and identity, which will benefit the Groups future business development and is in the interest of the company and its shareholders.
In addition, given that there are unaffiliated entities that are using a similar name and conducting similar business as the company, changing the name would remove any confusion that may cause to the public. The rebranding will be part of the companys new plan and vision to better utilize and capitalize on the business know-how and potential synergies with CLSA group and its affiliates.
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HK brokerage CLSA Premium forecasts loss of HK$170m for 2019
The estimate was provided shortly after the brokerage issued a profit warning for 2019.
The broker anticipates it would incur a substantial loss in the three months ended March 31, 2019.
The brokerage expects to register a substantial loss for the six months to end-June 2019.
Trading in shares of brokerage has been halted since 9:00 a.m. on July 29, 2019.
The brokerage has commenced a process of identification and disengagement of PRC clients in order to comply with the laws of the Peoples Republic of China.
The English stock short name for trading in the Shares on the Stock Exchange will be changed from KVB KUNLUN FG to CLSA PREMIUM and there will be no Chinese stock short name with effect from 9:00 a.m. on December 13, 2019.
Increase in referral fees, administrative expenses and lower cash dealing income weigh on profitability of the Hong Kong FX broker.
The expected year-on-year increase reflects an increase in other income resulted from the fair value gain on derivative portion of convertible bonds.
An internal investigation has raised concerns about the conduct of Mr Liu, in particular in relation to improper diversion of the Groups customers.
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