On August 27, two leading online brokerage firms highlighted their recent international expansion efforts and achievements in their latest financial reports. The reports revealed that Singapore, Malaysia, and Hong Kong have become the main markets for attracting new clients and capital, marking their first financial disclosures following substantial penalties related to illegally providing Chinese mainland investors access to overseas stock trading, as enforced by China’s securities regulator.
One company reported its revenue hit a record high of $182 million USD during the quarter ending June 30, reflecting a 31% increase compared to the same period last year and an 18% rise from the previous quarter. Excluding the impact of legal penalties, its net profit increased 20% quarter-over-quarter to $42.8 million USD, based on non-GAAP accounting standards.
The other company’s second-quarter revenue climbed 36% year-over-year to HKD 7.2 billion (approximately USD 918 million), with its adjusted net profit soaring fivefold to HKD 3.7 billion. Malaysia remained the primary source of newly funded accounts for the third consecutive quarter, followed closely by Hong Kong and Singapore, according to the company’s CEO and chairman.
In late May, China’s securities regulator announced that both firms lacked licenses to operate securities brokerage and margin financing services, yet they continued marketing and providing securities-related services within China for profit. This misconduct resulted in combined fines exceeding CNY 2.3 billion (about USD 342.1 million).
The company headquartered in Singapore reported a 92% increase in trading volume and a 46% rise in order numbers compared to a year earlier. Trading value in U.S. stocks more than doubled from the previous quarter, with a 69% year-over-year growth in accounts trading US stock options.
In Hong Kong, client assets for the same firm increased by 30% from the previous quarter. The number of active trading accounts soared by 132%, and trading orders grew by 71% year-over-year. Trading in US stock options jumped 231%, while trades in underlying US and Hong Kong stocks increased by 192% and 197%, respectively.
The other firm’s platform logged approximately 31.25 million registered users across its Futubull and Moomoo apps as of June 30, with 6.64 million active accounts, representing a 15% and 27% increase, respectively, from last year. The number of clients with assets on the platform grew 34% to 3.84 million, while total client assets surged 44% to roughly HKD 1.4 trillion (around USD 178.4 billion).
Both companies disclosed fines from the Chinese securities regulator as subsequent events in their first-quarter earnings reports. The firm based in Singapore reported a fine of approximately CNY 411 million (about USD 61 million), while the other firm recognized a provision of HKD 2.1 billion related to its penalty of CNY 1.9 billion (around USD 284 million).
The company that reported the higher net profit in the first quarter saw a decline of 61% to HKD 831 million (about USD 106 million) compared to the previous year, despite revenue and gross profit increasing by 25% and 29%, respectively. The firm also made provisions for its significant penalty, reflecting ongoing regulatory pressures.
Shares of the first company traded slightly lower, ending at USD 5.46 in New York yesterday, a 0.1% decrease. The other company’s stock increased by 1.4%, closing at USD 127.34.