Ep. 46: Futu, Tiger, and the trillion-dollar overseas online brokerage business from China


In episode 46 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma take a look at the market for China’s overseas online brokerages, which help Chinese people to invest in securities outside of mainland China. Of note, two Chinese fintech startups, Futu (富途 fù tú, or “path to riches”) and Tiger Brokers, went IPO in quick succession in March. This episode tells the stories of Futu and Tiger against a backdrop of relative volatility for U.S.-listed Chinese equities, as compared with their NASDAQ and NYSE peers. Join us as we explore the potential links between the rise of overseas online brokerages and this volatility, including the large pops — and subsequent bursts — of companies such as NIO, Luckin, and Qutoutiao that have listed in the U.S. in the past year. Indeed, Reuters has cheekily called the seesawing prices “trading with Chinese characteristics.”

For listeners who are new to this topic, we recommend that you press the pause button and first listen to episode 40, which provides a history of the Chinese stock market and its various exchanges, culminating in a primer on the new Technology Innovation Board on the Shanghai Stock Exchange.

Rui and Ying-Ying begin by exploring some of the reasons for the incredible demand for foreign-listed securities, which is a core driver of the rise of securities brokerages. Listen to find out: How did Alibaba’s U.S. listing help to kick this demand into high gear? How large is the brokerage market, and how is that size affected by such trends as the unprecedented rate of wealth creation by Chinese people, the do-it-yourself attitude of millennials, and China’s overwhelmingly retail (versus the U.S.’s institutionally dominated) market? What is the nature of Futu’s strong ties with Tencent, and how did they come about? In what ways are the founding stories of Futu and Tiger Brokers similar? Today, despite comparable trading volumes, in what ways are these two companies’ business models and sources of revenue divergent? What types of risks do the companies and their competitors face in China, and why do our co-hosts consider regulatory risks to be the greatest?

As always, you can find these stories and more at pandaily.com. If you enjoy our content, please do let us know by leaving us an iTunes review, liking our Facebook page, and tweeting at us at @techbuzzchina! Thank you also to our listeners over at our partner, dealstreetasia.com.

We are grateful for our incredible producers, Shaw Wan and Kaiser Kuo, and our interns, Wang Menglu and Mindy Xu. Thank you!