Indian firms mphasis and i-flex led the Finextra50 Index down one per cent last week, as concerns about the stronger rupee's impact reduced investors' earnings expectations. This was tempered by gains from UK fintech companies, including Software Solution Partnership, Microgen and Statpro, which are seeing positive growth outlooks.
The gainers
Acquisitive insurance IT group Software Solution Partnership posted the index's biggest gain last week, ending the week up 8.759% to 149p. This positive momentum comes on the back of several items of good news for the company in the previous 10 days: the finalisation of its acquisition of Sirius, and reporting full year 2007 profit after tax of £2.5 million, compared to a loss of £0.3 million the previous financial year.
Several other UK fintech companies also posted significant gains, despite the FTSE 100 ending the week down by 1.68%. Microgen ended up 7.082% to 46.60p after reporting a rise in first-half underlying pretax profit helped by good growth in three of the its four divisions. Pretax profit before exceptional gains on property disposal rose to £3.1 million from £2.9 million.
Statpro also continued its rapid rise. After an increase of 14% the previous week on the release of strong first-half results it closed on Friday up a further 6.87% to 98.25p. Rounding out the UK gainers, Fidessa also climbed 7.239% to finish at 1111p.
The losers
Mphasis and i-Flex lead the fallers last week, dropping 9.72% and 7.26% respectively by close of trading on Friday. These drops are in line with the wider IT sector in India, where there are concerns that companies may report lower earnings due to the appreciation of the local currency against the dollar. Although the rupee has remained fairly steady against the dollar recently - up just .81% since the Finextra50 started on 4 May, it has strengthened by 8.82% since the start of this year.
With the US dollar weakening against the rupee, Indian companies could lose their the labour cost advantage. They also have to deal with rising wages in India and tightened visa requirements for their workers entering key markets such as the US.
Blue-chip Indian IT company Infosys was recently forced to lower it full-year forecasts for revenue and earnings by 6% in rupee terms. And investors are looking closely at how other Indian IT companies are structuring their offshore/onshore mix to ride out currency fluctuations.
I-flex is due to post quarterly earnings on July 31, but unlike many other companies it doesn't give earnings guidance, so the market is being forced to speculate at this stage what impact the currency situation will have on profits. mphasis is also due to report quarterly results in August.
Meanwhile, in Europe payments terminals maker Ingenico fell 7.77% to EUR21.11 on the surprise departure of CEO Amedeo d'Angelo Ingenico. The company disclosed no reason for the departure. Philippe Lazare, 50, a member of Ingenico's board since February of 2005 has been appointed as the new CEO. He joins Ingenico from France's postal service, Groupe La Poste, where he was deputy managing director and a member of the executive committee.
In the US, where tech stocks generally performed well - the Nasdaq 100 Tech Sector index was up .88% for the week - two banking software companies bucked the trend. Online Resources fell 6.85% to $10.87 and S1 fell 6.19% to $7.88.
Index comparison
Methodology
More information on the Finextra50 Financial Technology Index methodology and constituent stocks can be found here.