Yu Fan

Yu Fan from CICC asked about the breakdown of client assets, specifically distinguishing between net asset inflow and mark-to-market gains, and the contribution from retail versus institutional investors. Yu Fan also inquired about the reasons behind the significant increase in both blended and cash equity take rates during the quarter.

Answer

Chairman and CEO Tianhua Wu explained that 30% of the client asset increase came from net asset inflow, with over 60% of that from Singapore and Hong Kong, primarily driven by retail clients. CFO John Zeng clarified that the cash equity take rate increase was due to active trading in low-priced US meme stocks, for which commissions are charged per share. The blended take rate also rose because futures trading volume, reported by notional value, decreased relative to cash equities.

Yu Fan asked for a breakdown of Q3 customer growth, specifically regarding existing versus net new paying clients, and sought more color on Futu's US market strategy and competitive advantages against peers.

Answer

CFO Arthur Chen provided a breakdown of new funded accounts, stating Hong Kong and Malaysia collectively contributed about 50% in Q3, with other markets ranging from 5%-15%. He noted that Greater China clients accounted for 46% of total funded accounts, and overseas markets for 54% at quarter-end. Chief of Staff to CEO, Head of Strategy and IR Daniel Yuan highlighted strong US momentum in new funded accounts and existing client engagement, attributing it to increasing brand influence (e.g., New York branding campaign) and a superior product experience tailored for sophisticated active traders in the competitive US market.

Yu Fan inquired about the breakdown of new funded accounts, specifically between existing and net new paying clients, given the strong customer growth. She also asked for more details on Futu's U.S. market strategy and its competitive advantages against other peers.

Answer

CFO Arthur Chen clarified that Hong Kong and Malaysia collectively contributed around 50% of total new funded accounts in Q3, with other markets contributing 5-15%. He noted that at the end of Q3, Greater China clients accounted for 46% of funded accounts, and overseas markets for 54%. Chief of Staff Daniel Yuan attributed strong U.S. momentum to increasing brand influence, including a large-scale branding campaign in New York City, and a superior product experience tailored for sophisticated active traders in the competitive U.S. market.

Yu Fan from CICC requested an outlook for the third quarter regarding client acquisition, net asset inflow, and trading volume. Additionally, the analyst asked for more specific data on the U.S. market's growth and the company's future plans and targets for the region.

Answer

Head of IR Jingyu (Daniel) Yuan provided a Q3 outlook, stating that based on current run rates, the company expects steady quarter-over-quarter growth in new funded accounts and that total client AUM should continue to grow. He also noted a chance for trading volume to increase again. For the U.S. market, Yuan highlighted a 'positive flywheel' effect, with five consecutive quarters of growth in options trading, and pointed to the NY Mets partnership and the launch of crypto trading as key strategic initiatives driving growth.