Spotlight: China online broker Futu Holdings wins big in trading debut on Nasdaq

Futu Holdings, a Hong Kong-based online brokerage, saw its stock price soar nearly 28 percent on the first trading day in the U.S. stock markets, as the fintech priced its Initial Public Offering (IPO) at 12 U.S. dollars per American depositary share (ADS) and listed on Nasdaq under the ticker symbol of FHL on Friday.

stock PRICE JUMPS UPON LISTING

Around market close, the fast-growing online firm notched 27.66 percent gains, despite solid losses of the three major U.S. stock indexes throughout the trading day. Upon listing, Futu's stock price once gained 39.5 percent at midday, a rare daily surge for U.S.-listed Chinese companies.

U.S. stocks closed lower on Friday, as investor sentiment was dented by the U.S. job report in February, which fell short of market expectations.

The Dow Jones Industrial Average was down 22.99 points, or 0.09 percent, to 25,450.24. The SP 500 decreased 5.86 points, or 0.21 percent, to 2,743.07. The Nasdaq Composite Index was down 13.32 points, or 0.18 percent, to 7,408.14.

Futu has offered 7.5 million ADSs to raise 90 million dollars. The initial stock price was at the high end of its target range of 10 to 12 dollars per share, which was announced on Feb. 26.

Founded in 2011, the company has built a digitized brokerage platform that offers a set of investing services, including trading, clearing, settlement services, margin financing, and securities lending in three major markets, Hong Kong, Chinese mainland and the United States.

The company filed for an IPO with the U.S. Securities and Exchange Commission (SEC) on Dec. 28, 2018, as its vast business have developed into a proper stage to go public in broader markets, said Leaf Li, founder, chairman and CEO of Futu Holdings.

For the 12 months ended Dec. 31, 2018, the company clocked 103 million U.S. dollars in revenues, according to statistics released by Futu.

As at Sept. 30, 2018, Futu had owned a rapidly growing user base of 5.3 million, among which over 457,000 are registered clients, or users opening trading accounts with Futu, and over 124,000 are paying clients, or registered clients having assets in their trading accounts.

The fintech believed that the growth of China's mass affluent class has driven demand for wealth management services and overseas asset allocation to diversify their asset portfolio.

"Except those internationally acclaimed large companies, Chinese investors prefer U.S.-listed Chinese companies when it comes to overseas stocks," Li told Xinhua.

He added that it also gives Futu more opportunities to serve Chinese investors by providing know-how on investing foreign stock markets to avert broader risks, such as high leverages and bear markets.

With its financial services mainly placed in Hong Kong, the company chose Shenzhen, a city in South China's Guangdong Province, for the research and development of their products, so as to bring to full play the city's advantage as China's technology innovation base, according to Li.

With partnership with a number of banks, Li noted that going public can greatly improve customers' confidence, and help upgrade Futu's credit rating by major financial institutions.

"One positive change was that after we filed for IPO last year, some banks came to offer lower-cost capital for us," he said. "U.S. listing will allow local investors to know more about Futu ... We hope to do business in local market as well."

CHINESE FIRMS CONTINUE TO SEEK U.S. IPO IN 2019

Futu has been the first big Asian IPO in the United States so far this year. Since 2019, several Chinese firms have filed for IPOs with the SEC, including augmented reality entertainment platform Blue Hat and e-commerce platform Ruhnn Holding.

There are over 10 pending IPO applications with the SEC by China-based companies as shutdown of U.S. federal government at turning of the year resulted in significant backlog of work with the SEC, according to an industry insider.

The year of 2018 saw a boom of Chinese companies listing in the United States thanks to better performance of U.S. equity markets in most of the year as well as the need to improve image in international market and better corporate governance. The Chinese IPOs also stood out in terms of scale at major U.S. bourses.

A total of 43 Chinese companies were newly listed in the U.S. market last year, higher than the 24 firms in 2017 and 10 in 2016, according to data from Wind, a financial data provider.

In 2018, four Chinese companies raised more than 1 billion dollars in U.S. IPOs, i.e. video platform iQiyi, electric car maker Nio, Tencent Music Entertainment and e-commerce platform Pinduoduo.

Nasdaq welcomed 185 IPOs raising 27.7 billion dollars in 2018, among which 33 were from the technology sector, raising roughly, a 38 percent of the total capital, according to the leading U.S. bourse.

In 2018, seven of the largest 10 technology IPOs by proceeds raised chose to list on Nasdaq, among which iQiyi (raising 2.25 billion dollars) and Pinduoduo (raising 1.62 billion dollars) topped the tally, followed by Brazil's StoneCo Ltd (raising 1.2 billion dollars) and America's Dropbox (raising 756 million dollars), based on statistics released by Nasdaq.

At New York stock Exchange (NYSE), a total of 25 international IPOs raised 10 billion dollars in proceeds (in 2018), among which 18 companies came from China, including Tencent Music Entertainment and Nio, according to a January report by NYSE.

Alexandre Ibrahim, head of international capital markets at NYSE, said he looked to more Chinese companies to go public in the U.S. stock markets in 2019.

"We're very excited about emerging markets ... it's a very potent market for us," Ibrahim told Xinhua in a recent interview.

(by Xinhua writers Ma Qian, Liu Yanan. Xinhua reporter Wang Hongjiang in Beijing contributed to this report.)