Hong Kong broker Futu continues “exponential growth”
13 August 2020 Hong Kong
Image: ronniechua/Adobe.com
Futu, an online broker for Hong Kong and Mainland China, has reported an 83 percent year-over-year increase in Q2 balances for its margin financing and securities lending balances.
Balances for these businesses now sit at HK$7.5 billion (USD 967.7 million) as of the end of June.
Leaf Hua Li, Futu’s chairman and CEO, explains that the growth also led to a bumper quarter for interest income, which hit HK$207.9 million (USD 26.8 million), an increase of 82.5 percent from HK$ 113.9 million (USD 709.6 million) earned in the second quarter of 2019.
“We generated higher interest income from initial public offering (IPO) financing due to an active Hong Kong IPO market, higher bank interest income due to higher idle cash balance from clients as well as higher margin financing interest income due to the increase in daily average margin financing balances,” he says.
The Hong Kong IPOs of JD.com and NetEase alone garnered Futu north of HK$15 billion (USD 1.94 billion), the broker says.
“We believe that the increase in US-listed Chinese companies seeking a secondary listing in Hong Kong and the surge of high-profile Hong Kong IPOs will act as major tailwinds to our growth,” Hua Li adds.
Overall, Futu’s investing platform, Futubull, which provides market data, trading service and news feed of Hong Kong, Mainland China and US stock markets, saw strong growth across all metrics.
By the end of Q2, total trading volume increased 202 percent year-over-year to reach “historic highs” of HK$643.9 billion (USD 83 billion), according to Futu’s CEO.
Of this total, trading volume for US stocks was HK$429.3 billion (USD 55.4 billion), trading volume for Hong Kong stocks was HK$209 billion (USD 26.97 billion), and the trading volume for stocks under the Stock Connect was HK$5.5 billion (USD 709.6 million).
Meanwhile, Futu reported that the total number of users increased 52 percent year-over-year to 9.3 million, with the growth rate of paying clients from the mainland hitting a “record high” since Q4 2018, while the growth of Hong Kong-based paying clients further accelerated to 125.2 percent year-over-year for the quarter.
“During our full-year 2019 earnings call, we guided for 90,000 paying clients addition in 2020,” Hua Li notes. “Six months into 2020, we have already exceeded our full-year growth target.
Futu is now projecting to attract 280,000 net new paying clients this year, which would represent a 141 percent year-over-year growth in its total number of paying clients.
Unsurprisingly, the across-the-board growth led to the broker’s total revenues increasing 164.4 percent year-over-year for Q2, to sit at HK$687.6 million (USD 88.7 million).
Futu also used its Q2 report to reveal it has established partnerships with “eight reputable mutual fund managers”, including T. Rowe Price, Franklin Templeton and Amundi.
Moreover, as of August 12, Futu Singapore was granted in-principle approval from the Monetary Authority of Singapore for the Capital Markets Services licence application.
Hua Li says: “This marks a milestone of our internationalisation, and we will continue to look for new markets to extend the footprint of our business.”
Balances for these businesses now sit at HK$7.5 billion (USD 967.7 million) as of the end of June.
Leaf Hua Li, Futu’s chairman and CEO, explains that the growth also led to a bumper quarter for interest income, which hit HK$207.9 million (USD 26.8 million), an increase of 82.5 percent from HK$ 113.9 million (USD 709.6 million) earned in the second quarter of 2019.
“We generated higher interest income from initial public offering (IPO) financing due to an active Hong Kong IPO market, higher bank interest income due to higher idle cash balance from clients as well as higher margin financing interest income due to the increase in daily average margin financing balances,” he says.
The Hong Kong IPOs of JD.com and NetEase alone garnered Futu north of HK$15 billion (USD 1.94 billion), the broker says.
“We believe that the increase in US-listed Chinese companies seeking a secondary listing in Hong Kong and the surge of high-profile Hong Kong IPOs will act as major tailwinds to our growth,” Hua Li adds.
Overall, Futu’s investing platform, Futubull, which provides market data, trading service and news feed of Hong Kong, Mainland China and US stock markets, saw strong growth across all metrics.
By the end of Q2, total trading volume increased 202 percent year-over-year to reach “historic highs” of HK$643.9 billion (USD 83 billion), according to Futu’s CEO.
Of this total, trading volume for US stocks was HK$429.3 billion (USD 55.4 billion), trading volume for Hong Kong stocks was HK$209 billion (USD 26.97 billion), and the trading volume for stocks under the Stock Connect was HK$5.5 billion (USD 709.6 million).
Meanwhile, Futu reported that the total number of users increased 52 percent year-over-year to 9.3 million, with the growth rate of paying clients from the mainland hitting a “record high” since Q4 2018, while the growth of Hong Kong-based paying clients further accelerated to 125.2 percent year-over-year for the quarter.
“During our full-year 2019 earnings call, we guided for 90,000 paying clients addition in 2020,” Hua Li notes. “Six months into 2020, we have already exceeded our full-year growth target.
Futu is now projecting to attract 280,000 net new paying clients this year, which would represent a 141 percent year-over-year growth in its total number of paying clients.
Unsurprisingly, the across-the-board growth led to the broker’s total revenues increasing 164.4 percent year-over-year for Q2, to sit at HK$687.6 million (USD 88.7 million).
Futu also used its Q2 report to reveal it has established partnerships with “eight reputable mutual fund managers”, including T. Rowe Price, Franklin Templeton and Amundi.
Moreover, as of August 12, Futu Singapore was granted in-principle approval from the Monetary Authority of Singapore for the Capital Markets Services licence application.
Hua Li says: “This marks a milestone of our internationalisation, and we will continue to look for new markets to extend the footprint of our business.”
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