China’s online brokerage Futu eyes Malaysian market following its Singapore foray in overseas expansion drive

Futu Holdings, an online Chinese brokerage backed by Tencent, is accelerating its overseas expansion by entering the growing Malaysia market as it seeks to counterbalance Beijing’s tightening grip on outbound securities investments from mainland China.

Moomoo Malaysia, fully owned by Futu and launched on February 27, offers local investors a platform to trade more than 1,000 Malaysia stocks and over 9,000 US stocks and ETFs, arming them with support facilities like analytical tools, investment content and news.

“There’s a gap between investor demand, especially among the younger generation, and what traditional brokers can offer,” said Robin Xu, senior vice-president and head of Southeast Asia and Oceania at Futu Holdings, in an interview with the Post. “We are looking to bridge that gap in Malaysia.”

Account opening and securities trading processes at Futu, which can all be done online, are already among the most streamlined in Malaysia, Xu said. Meanwhile, features like big data-powered analysis and market insights that have traditionally been made available only to institutional investors, will also help bridge the information gap and empower retail investors, he added.

“There’s a huge potential for increasing investment penetration rates and trading activity, thereby enhancing financial participation within the country,” he said. “Our goal is to make the cake bigger, not just compete with traditional brokerage firms.”

Established in 2012, Futu Holdings was the first mainland China-based brokerage to offer Hong Kong and US stock market services to mainland Chinese investors, and is now seeking to add to the list of countries where it offers its services.

The Malaysian market entry follows Futu’s expansion into Singapore in 2021. By mid-2023, Futu’s user base in the island nation had surpassed 800,000, accounting for nearly 30 per cent of the local adult population, according to the company’s earnings reports.

Xu said Futu can replicate its Singaporean success in Malaysia by capitalising on the similarities between the two markets. It will mainly target the community of young investors who are aged between 25 and 45, and is aiming for a 20 per cent market share in Malaysia over the next two to three years.

As China tightens regulations on mainland investors’ overseas securities trading to curb capital outflow, Futu has been accelerating its hunt for new markets to fuel growth. The company established its first offline ‘experience store’ in Hong Kong’s bustling Tsim Sha Tsui district last year, to increase its physical presence and attract new clients.

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Futu also ventured into Japan and Canada last year, where the user acquisition and conversion rates have sequentially improved, according to a recent note from Daiwa.

“To some extent, China’s tighter regulations was not a bad thing for us,” Xu said. “It makes us more determined to expand worldwide, and we now see huge potential in underserved finance markets globally.”

Analysts now expect Futu to post a 51 per cent profit growth to US$566.8 million for 2023 fuelled by market share gains in Hong Kong and Southeast Asia, according to Bloomberg data.

“Although our mainland growth may be impacted, our growth in overseas markets can more than compensate,” Xu said. “With the many countries and regions we are in now, and some other new markets we are looking at for the future, there are substantial opportunities for us.”