Futu Holdings a Tencent-backed Chinese trading app has chosen Singapore as its regional base to tap the retail investor trading boom in Southeast Asia.
The company launched its trading app in Singapore in March 2021 when it opened its office for business. The city-state will be seen as the key driver in Futu’s international expansion. The company is currently looking to expand to Thailand and Malaysia.
According to Gavin Chia, director for Futu Singapore Pte., with more people working from home and trading, all brokerages in Singapore are doing well. Strong demand and less competition have made the city-state an ideal place for making the firm’s regional base. He added that Singapore’s support for the technology sector and the high adoption rate are also major factors contributing to this decision.
Singapore has at least 10 local brokers despite some consolidations that are serving the retail traders along with behemoths such as TD Ameritrade and Interactive Brokers Group Inc.
The retail frenzy which has seen an upsurge during the COVID-19 pandemic has helped online brokers like Futu which is China’s version of the United States favorite Robinhood have benefitted. During the pandemic, people generally bored being stuck at home find consolation in low-commission trading apps. The increasing trading volume has boosted the trading commission for online brokers. This year company’s NASDAQ-listed shares are more than tripled after climbing to 343% in 2020.
Futu Holdings forecasts getting 700,000 new paying clients for its online brokerage business this year, a 135% growth, with the US and Singapore accounting for 20%. The company has stated that most of its revenue comes from its users in mainland China and Hong Kong. Globally the company has more than 13 million users.
The investors can trade the US, Hong Kong, and Singapore stocks on the trading platform. According to the company, the United States market is very popular with the existing clients in Singapore who have an interest in gaming stocks and tech. People in Singapore like to buy Disney shares whenever there is a new movie coming up beside the popular ones – Tesla Inc. and FAANG shares.
Founded in 2012, Hong Kong-based Futu is a part of a surge of Chinese financial companies setting up in Hong Kong to enable overseas investments for the mainland investors.
The company’s online brokerage platform enables individual investors to trade in listed stocks. Futu Holdings offers users margin financing, trade execution, market data and information, and social networking services through its proprietary digital platform Futbull for three major markets China, US, and Hong Kong.
Futu Holdings is backed by China’s multinational technology conglomerate holding company, Tencent Holdings Ltd. Firm’s other investors include Sequoia Capital China, Matrix Partners China, and General Atlantic.