Hong Kong's online broker Futu wins big on Nasdaq trading debut
Futu Holdings, a Hong Kong-based online brokerage, saw its stock price soar nearly 28 percent on the first trading day on the U.S. stock market, 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 S&P 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, the Chinese mainland and the United States.
The company filed for an IPO with the U.S. Securities and Exchange Commission (SEC) on Dec. 28 as its vast business has developed to 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, the company clocked 103 million U.S. dollars in revenues, according to statistics released by Futu.
As at Sept. 30, 2018, it 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 believes 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 China's southern 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.
Having arranged partnerships 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 markets as well."