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With a global employee count of more than 70,000 and a market value of £67.17 billion (market capitalisation), GlaxoSmithKline (London Stock Exchange [LSE]; ticker: GSK) is a well-known multinational pharmaceutical and biotechnology company headquartered in London, United Kingdom (UK).
Founded in the early 1700s at the Plough Court Pharmacy in London, the company has grown considerably and operates in over 75 countries today.
The company's core segments include Commercial Operations and Research and Development, with a focus on cancer medicine, speciality medicine, general medicine, and various vaccines.
CFDs, or ‘Contracts for Differences’, are leveraged financial products traded in the over-the-counter market (OTC). CFDs are contracts between two parties (a buyer and a seller) to exchange payments depending on the underlying asset's price. This enables investors to take long (buy) and short (sell) positions across a wide selection of financial markets, like Currencies (Forex), Commodities, Bonds, Digital Currencies, Exchange-Traded Funds (ETFs) and, of course, Single Stocks, such as GlaxoSmithKline.
A key observation is that CFDs are derivatives, deriving their value from the underlying asset’s performance. Ownership of the underlying asset is not possible with CFDs; investors ‘take a position’ based on the underlying asset's price movement. In fact, irrespective of the market traded, all CFD transactions are cash-settled.
Another key observation to understand when trading CFDs is margin and leverage. Trading on margin allows investors to execute larger positions with smaller initial investment amounts. Margin is the minimum value of your trading account required to execute a CFD position. The margin percentage will differ depending on the market traded and the size of the trading position. Let’s assume GSK’s share price is GBX1,632 to demonstrate how leverage works. Investing in 500 company shares without leverage would equate to an initial investment amount of £8,160, plus any commissions associated with the transaction. A 20% margin requirement with FP Markets means the investor only needs to ‘put up’ 20% of the total investment value to trade an equivalent position size of 500 shares: £1,632 (8,160 * 0.2).
Step-By-Step Guide on How to Trade GSK Share CFDs with FP Markets
1. Open an FP Markets Forex and CFD Trading Account
Visit the FP Markets homepage, click the ‘OPEN LIVE’ tab in the upper right corner, and complete the online Account Application.
2. Download your Trading Platform
Choosing the right trading platform is essential. It must meet all your trading needs.
To select your trading platform, use your login details to access the FP Markets Client Portal. The Portal allows investors to perform several tasks, including choosing and downloading their preferred trading platform. While the MetaTrader 5 (MT5) platform is popular for trading Share CFDs, FP Markets offers a wide selection of other trading platforms, including MetaTrader 4 (MT4), cTrader, and TradingView.
3. Find the GSK Ticker
Finding the GSK ticker on the MT5 trading platform can be done by adding the stock to the platform’s Market Watch (Ctrl+M). Type ‘GSK’ in the search function located at the bottom of the Market Watch and select the stock. This will generate a new row, from which you can drag and drop the stock to the chart’s main interface on the right and alter its properties to suit your trading style.
4. Place the Buy or Sell Order
Suppose your research indicates GlaxoSmithKline is undervalued (oversold) or overvalued (overbought). Opening a trading position using the MT5 platform is simple for both buy and sell orders.
Press F9 to activate the order window (left image below) and enter your trading parameters according to your research. For example, to enter long (short) at current prices, select ‘Market Execution’ in the ‘Type’ drop-down tab. Investors can also enter the market using a ‘Pending Order’. Once the order type is selected, you can then enter the trading volume, stop-loss and take-profit values, and click on the buy or sell order to execute the trade.
An alternative approach to placing a buy or sell order is through MT5’s One-Click Trading feature (Alt+T – see image to the right). Albeit more popular with shorter-term traders, assuming trading volume is set, this function allows traders to enter the market with one click. The drawback is that to set a stop-loss or take-profit order, you must configure this in the trading terminal (Ctrl+T) after the trade is active.
Long/Short Positions Using Share CFDs:
GlaxoSmithKline remains firm this year, up +11% (year to date). The company’s Q2 24 earnings (released 31 July) were robust, bolstered by impressive sales growth, rising +13% (YoY) to £7.9 billion, along with core operating profit rising +18% to £2.5 billion and a jump in earnings per share (EPS) to 43.4p (+13%). Free cash flow for the quarter was also £328 million (Q2 23 stood at £348 million).
Company outlook and guidance for 2024:
Chief Executive Officer of GSK, Emma Walmsley, commented: ‘GSK's momentum this year continues with excellent second quarter performance, reflecting strong operational execution and the strengthening breadth of our portfolio to both prevent and treat disease. Q2 sales grew in all areas, with Specialty Medicines in particular benefitting from new product launches in oncology and HIV. In R&D, so far this year, we have secured approvals or filings for 10 major opportunities and reported positive data from 7 phase III trials. We have also strengthened capabilities in key technology platforms and completed investments to develop new mRNA vaccines, ultra-long-acting HIV medicines and a promising new medicine for severe asthma. All this supports our future growth and confidence to bring meaningful innovation to patients’.
According to analyst projections (Reuters poll), 45% of analysts are bullish about GlaxoSmithKline, 42% recommend a hold, and 13% are bearish. The current mean (median) price target for the stock is GBX1,871.73 (GBX1,810.00).
Since 2013, GSK has been rangebound between GBX1,240 and GBX1,835, visible on the monthly timeframe. Without an obvious long-term trend to work with or clear support and resistance nearby on the monthly chart, attention will likely shift to the daily timeframe’s technical structure for directional cues.
As of writing, price action on the daily timeframe shows that the stock recently faded resistance at GBX1,654 and is closing in on support from GBX1,583. Areas to be aware of beyond aforementioned levels are trendline support, taken from the low of GBX1,302, and a resistance area between GBX1,719 and GBX1,708.
Buying physical shares of GSK and owning part of a company (proportionate to the number of shares purchased) is an alternative investment option. Returns from physical shares can come from dividend payments and capital gains. Owning physical shares also comes with voting rights.
Investing in single stocks through the futures and options market is another option for investors. Like CFDs, futures and options contracts are derivatives that rely on the underlying asset’s price movement to define their value and are traded on a public derivatives exchange.
Both futures and options contracts create a price guarantee. The primary difference is that a futures contract commits both parties to transact at the expiration date. In contrast, an options contract gives the contract holder the right to buy and sell, not the obligation.
An ETF represents a fund listed and traded on a stock exchange, with investors buying and selling shares of the fund just like they can with regular stocks. A wide selection of ETFs is available, including fixed-income ETFs, commodity ETFs, alternative investment ETFs, and equity ETFs.
Importantly, even if the ETF you choose to invest in has exposure to GSK, its price movement will not precisely mirror the price of GSK. Investors choose ETFs primarily because of their low-cost diversification.
1. Does GSK pay a dividend?
GSK does pay a dividend. As of writing, GSK’s annual dividend yield is 3.76%.
2. What are the major differences between CFDs and physical shares?
Ownership rights are a key differentiating point between the two investment options. With CFDs, direct ownership is not possible, while dealing in physical shares bestows partial ownership of the company.
Traditional share dealing is also more popular with longer-term investors, while CFDs are favoured among short to medium-term investors. Another distinction between the two investment vehicles is leverage. CFDs offer far greater leverage options than share dealing.
3. Can I trade GSK on MT5?
With FP Markets, GSK can be traded on both MT5 and cTrader.
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