(Bloomberg) -- A global equity selloff that wiped about $1.25 trillion from the value of U.S. stocks in one day and sent a gauge of market volatility towards the highest level since August 2011 is proving to be good news for one European mid-cap stock.
Flow Traders NV, an Amsterdam-based market maker for exchange-traded funds, benefits when spreads widen and transaction volumes rise in volatile markets. Monday's surge for the Cboe Volatility Index, also known as the VIX, to 37 from 17 has been a shot in the arm for the firm, which has suffered during an extend period of low volatility.
Shares rose as much as 14 percent Tuesday, the most intraday for more than two years, making it one of only a handful of gainers on the AEX All-Share index. Before this week, the shares had fallen 38 percent over the past year, as reduced trading volumes led to profit declines.
“With the spike in VIX seen over-night, the first signs of volatility returning are visible,” ING Bank NV analyst Rosine van Velzen wrote in a note. “If the volatility truly normalises, this is definitely a tailwind for Flow Traders.”
Flow Traders was also added to ABN Amro's favorites buy list before the market open Tuesday. Analyst Ron Heijdenrijk wrote in a note that the company would “benefit significantly from the current market turmoil,” as volatility is “back with a vengeance.”
Gains today were also helped by the company saying it expects to meet applicable capital requirements set out in the European Capital Requirements Regulation, with its dividend policy to remain unaffected.
--With assistance from Blaise Robinson
To contact the reporters on this story: Ruben Munsterman in Amsterdam at rmunsterman1@bloomberg.net, Sam Unsted in London at sunsted@bloomberg.net.
To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Beth Mellor, Celeste Perri
©2018 Bloomberg L.P.
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