This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk00: Hello ladies and gentlemen, welcome to Futu Holdings' fourth quarter and full year 2020 earnings conference call. At this time, all participants are in the listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. And now I'd like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO and Head of IR at Futur. Please go ahead, sir.
spk05: Thanks, operator. And thank you for joining us today to discuss our fourth quarter and full year 2022 earnings results. Joining me on the call today are Mr. Leif Lee, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu. Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. Forward-looking statements involving hearing risks and uncertainties. We caution you that a number of important factors could call back to results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings for the SEC, including its registration statement. So with that, I will now turn the call over to Lief. Lief will make his comments in Chinese, and I will translate.
spk08: Thank you for attending today's conference. In the fourth quarter, we competed with 420,000 real estate clients, with a 27% drop in the ratio. This quarter, the first half of the stock market had a lot of feedback. Although the second half of the stock market has rebounded, the market is different in terms of the continuity of this rebound. In such a market environment, customer sentiment is affected, and customer speed is slowed. By the end of 2022, our real estate customers reached about 1.5 million, which is a 20% increase. In 2022, we have received more than 240,000 real estate customers, Thank you all for joining our earnings call today. In the fourth quarter, we added over 42,000 paying clients, down 27% sequentially. Stock market plummet in the first half of the quarter,
spk05: and the certainties around the sustainability of market rebound in the second half affected user sentiment, which led to the deceleration of client acquisition. Our total paying clients reached around 1.5 million, representing 20% growth year over year. In 2022, we managed to add over 240,000 paying clients, exceeding our full year guidance by 20%. Despite a challenging market backdrop, Our average quarterly client retention rate in 2022 remained above 98%, which speaks to the stickiness of our product.
spk08: In Hong Kong, we continue to promote our product among the population age over 35.
spk05: through offline workshops and campaigns, as well as targeted online ads. In the past quarter, people over 35 contributed over 50% of our new paying clients in Hong Kong. We'll further roll out offline events and refine product offerings to reach and serve this population. In the US market, we saw an improvement in client quality at the first month average net asset inflow of new paying clients increased by approximately 40% sequentially. Client acquisition in Singapore remained resilient in the fourth quarter, mainly attributable to continued client interest in money market and fixed income fund products.
spk08: The total asset growth is the same as the 2% growth rate and the 13% growth rate, reaching 4,171 Hong Kong dollars. The growth rate of the growth rate is mainly due to the increase in the market value of client Hong Kong shares and the strong entry into the gold market. At the end of the quarter, The total client assets increased by 2% year-over-year and 13% quarter-over-quarter to HK$417 billion. The sequential increase was largely due to market appreciation of our clients' Hong Kong stock holdings.
spk05: and robust net asset inflow across all regions. As of quarter end, margin financing and securities lending balance declined by 10% sequentially. While we saw an uptick in securities lending balance amid market volatilities, margin financing balance declined as clients unwound some of their positions during hard-com market rebound.
spk08: The total trading volume is HK$1.1 trillion. Comparing the basic balance, The share price of Hong Kong shares accounted for 36%. In the fourth quarter, the share price of Hong Kong shares rose by 31%, reaching HK$39.7 billion. The rise was due to an increase in the share price of Chinese new economic companies and the ETFs. The stockholders used the latter to suppress the market trend for a short period of time. The share price in Hong Kong's stock and equity trading markets has risen to historical highs, reaching 8% and 15% respectively. In the fourth quarter, The U.S. technology stock was sold out in the market, resulting in a 10% decrease in the exchange rate of our U.S. stocks, which is about 6,750 billion Hong Kong dollars.
spk05: Total trading volume was flattish quarter over quarter at 1.1 trillion Hong Kong dollars, of which Hong Kong stock trading constituted 36%. In the fourth quarter, Hong Kong stock trading volume increased by 31% sequentially to 397 billion Hong Kong dollars. The increase can be attributed to higher trading volume of China new economy companies and leveraged an inverse ETF, which clients used as tactical tools to make short-term bets on market trends. Our market shares in Hong Kong futures and options trading further climbed to historic highs of 8% and 15% respectively. U.S. stock trading volume was $675 billion Hong Kong dollars, down 10% sequentially amid market sell-offs of many U.S. technology names.
spk08: Client assets managed by financial institutions have increased by 68% in the same way, and have increased by 22% in the same way, reaching 3.2 billion Hong Kong dollars. Under the GACI background, monetary funds are still favored by customers. In Singapore, we have launched commercial funds and other funds. In Hong Kong, we will continue to provide more stocks and index-hanging structural products for high-end customers in order to satisfy customers. In the fourth quarter, we also became the first retail marketing platform of Baylider China, a technology innovation fund in Hong Kong, and improved the brand awareness of rich people.
spk05: Total client assets in wealth management grew 68% year-over-year and 22% quarter-over-quarter to HK$32 billion, mainly driven by sustained interest in money market funds amid interest rate hikes. We onboarded commodity funds and alternative funds in Singapore. In Hong Kong, we expanded equity and index-linked structure product offerings for high-net-worth clients to meet their different risk-return objectives during market turmoil. In the fourth quarter, we also became the first retail platform in Hong Kong to distribute the BGF China Innovation Fund at BlackRock, thereby enhancing the brand awareness of Food2MoneyPlus.
spk08: Our corporate services have 333 IPO distributors and IR customers, as well as 638 ESOP customers, which respectively increased by 41% and 60%. In the fourth quarter, we, as a joint accounting manager, participated in many major Hong Kong IPOs, including 360 Sucre and Weilong. In 2022, we sold a total of 41 Hong Kong stock IPOs. According to WanDe's statistics, Our enterprise business has 333 IPO distribution and IR clients.
spk05: as well as 638 ESOP clients of 41% and 60% year-over-year respectively. We acted as joint book runners for several high-profile Hong Kong IPOs, including those of 360 Digitech and Weilong Delicious. We underwrote 41 Hong Kong IPOs in 2022 and ranked first among all brokers, according to WIND. Of all 28 companies listed in 2022 with market cap over HK$10 billion by the end of the year, 23 companies have used one or more of our enterprise product offerings. In the fourth quarter, we also launched Moomoo ESOP in Singapore to provide corporate clients with ESOP solution services. Next, I'd like to invite our CFO Arthur to discuss our financial performance.
spk01: Thank you, Liv and Daniel. Before going through our financial performance, I'd like to give you an update on our latest share repurchase program announced on March 11, 2022. At the end of last year, we have repurchased an aggregate of 8 million ADS with approximately $250 million total repurchase amount in the open market transaction. This constitutes about 50% of the maximum purchase amount of $500 million approved under our share repurchase program. Now, please allow me to walk you through our financial performance in the fourth quarter. All numbers are in Hong Kong dollars, unless otherwise noted. Total revenue was $2.3 billion, up 42% from $1.6 billion in the fourth quarter of 2021. Despite market volatility, we ended 2022 with full-year revenue growing 7% to $7.6 billion. Brokerage commission and handling charge income was $1 billion, an increase of 22% year-over-year and a 10% QVQ. The increase was mainly driven by a higher blended commission rate of 9.6 basis points. The commission per share pricing model for U.S. stock trading led to a further hike in blended commission rate, a stock price drop, and the number of the shares traded increased. Interest income was $1.1 billion, an increase of 84% year-over-year and 29% Q-over-Q. The increase was mainly driven by higher interest income from cash deposit due to higher benchmark interest rate, which more than offset by the lower margin financing income due to lower daily average margin financing balance. Other income was $94 million, down 27% year-over-year and a 12% Q-over-Q. The year-over-year decrease was primarily attributable to lower currency exchange service income and underwriting fee income, partially offset by higher funded distribution income. Our total cost was $342 million, an increase of 58% from $217 million in the fourth quarter of 2021. Brokerage commission and handling charge expenses were $64 million, down 27% year-over-year and a 23% Q-to-Q. Expenses didn't move in line with our brokerage commission and handling charge income, mainly due to cost saving from our U.S. self-clearing business. Interest income was $182 million, up 227% year-over-year and 307% Q-over-Q. The year-over-year and the Q-over-Q increase was mainly driven by higher interest expenses associated with our security lending business. Processing and servicing costs were $96 million, up 31% year-over-year and 6% Q-over-Q. The year-over-year increase was due to higher data transmission fee and system upgrade fees. As a result, our total gross profit was $1.9 billion, an increase of 40% from $1.4 billion in the fourth quarter of 2021. Growth margin was 85% as compared to 86% in the fourth quarter of 2021. Operating expenses were down 1% year-over-year and up 7% Q-over-Q to $818 million. To break it down, IND expenses were $334 million, up 24% year-over-year and 7% Q-over-Q. The year-over-year increase was mainly due to increasing R&D headcount as we continue to support new product offering, investing in the U.S. self-clearing capabilities, and the customized products for international markets. Looking into 2023, we intend to further grow our headcount by middle to high team on top of our 2,800 employees at the end of last year to support expansion into new international markets. Selling and the marketing expenses was $153 million, down 55% year-over-year and 35% Q-over-Q. Expenses declined due to slower client acquisition amid weak market sentiment and the lower client acquisition costs. General expenses were $330 million, up 52% year-over-year and 56% Q-over-Q. The rise was primarily due to increasing head count for general administrative personnel, and to a less extent, an increase in professional fees relating to our proposed Hong Kong IPO listing. As a result, our net income increased by ninety two percent year over year and twenty seven percent Q over Q to nine hundred fifteen nine million. Net income margin expand to 42% in the fourth quarter as compared to 31% in the same quarter last year, mainly due to lower marketing spending. Our effect tax rate for the quarter was 14.7% due to higher tax rate from our U.S. operations. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead.
spk00: Thank you. We will now begin the question and answer session. To ask a question, please press star one on your telephone and wait for your name to be answered. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Once again, that's star one one for questions. Our first question comes from the line of Han Ku from CICC. Please ask your question, Han.
spk07: Hello, Mr. Guan. I'm Han, a researcher from China. Thank you very much for giving me this opportunity. Congratulations to the company for achieving a successful performance. I have two questions for you. The first question is, we saw that the company has added new markets like Australia and Japan last year. Then I would like to ask about the current industry situation in the new market, such as the image of customers, the supply of products, and so on. The second question is to ask about the financial management business, because we see that every quarter is maintaining a continuous growth. I would like to ask about the motivation behind it, and then the general structure of our products, as well as the current financial management that has contributed to us in terms of revenue volume and the penetration rate of users. Then I will also briefly answer my question here. This is Han from SACC. Thanks very much for taking my question, and congrats on another strong quarter. I have two questions. First, personally, how about the latest progress in the new market, such as Australia and Japan, for example, the user profile and the product and the service offering? Secondly, we see the continuous rapid growth in the world management business. Could you please share more color on the driver behind the product structure and our forward plan? Besides, how about the revenue contribution in the fourth quarter of the wealth management business and also the user penetration to our brokerage business? Thanks.
spk08: Thank you for the question. I will answer it. In the fourth quarter, The Australian market controls the investment in various customer channels and reduces the investment budget of the channels with low customer efficiency. At the same time, they have been continuously optimizing the environment of opening and closing. Through online and offline communication, we have deepened the connection between the team and the customer, and have also improved the customer experience here. Therefore, we can see that the cost of customers in the fourth quarter in Australia is very significant. In the future, we will continue to improve our product capability and accuracy of our customers in Australia, and we will continue to follow our marketing strategy.
spk05: Thank you. In Q4, we controlled various client acquisition channels in the Australian market, reduced the budget for inefficient client acquisition channels, and constantly optimized the account opening funnel. And by deepening connection with clients via online and offline exchanges, we also improved clients' product experience. So as a result, the client acquisition cost in Q4 in Australia fell substantially on a QOQ basis. And in the future, we'll continue to improve our product capability and the ability to efficiently acquire clients as well as upgrade our marketing strategy. Thank you.
spk12: Let me continue to answer the second question about wealth management. In the fourth quarter, wealth management has continued to grow rapidly. It is mainly due to the continuous attraction of low-risk fund products to customers. At the same time, we are also continuously expanding the fund category to meet the investment financial needs of different risk groups. Combined with the data of 4Q, wealth management is a good catcher for attracting customers and acquiring assets. Specifically, Q4 wealth management asset growth is almost all from customer capital growth. In addition, the new added asset customer ratio brought by the fund is also gradually improving, especially in the Singapore market. In the future, we think that the financial management business still has a lot of room for growth. We plan to continue to enrich our structured product category in Hong Kong. In the first half of the year, we will realize the five types of voting types, including fixed-pricing structured products, fund-linked voting, etc., to better meet the asset configuration needs of professional investors and high-quality customers. In Singapore, our public product policy has been relatively perfect. In the future, we will focus on the low-risk fund group and the Paixi fund group, and gradually expand other product types, including bonds, private funds, and structured products, etc. Thank you.
spk05: Wealth management business maintains strong growth momentum in the fourth quarter, mainly because low-risk fund products remain attractive to our clients during the rate hike cycle. And meanwhile, we have been broadening fund offerings to meet the investment and financial needs of customers with different risk appetites. And in Q4, wealth management business helped attract lots of clients and assets. Specifically, the growth in wealth management AUM in Q4 was almost entirely driven by new asset inflows. And the percentage of our new paying clients brought by fund products has also been growing. That's especially true in the Singapore market. And looking ahead, we see a lot of room for growth in wealth management business. And we plan to continuously diversify structured products in Hong Kong with an aim to provide five types of notes, including fixed dividend structured products and fund-linked notes in the first half of this year to better meet the asset allocation needs of professional investors and high net worth clients. And in Singapore, we have comprehensive mutual fund product offerings. and we'll focus on introducing more low-risk fund portfolios and dividend-paying fund portfolios while gradually expanding other product categories, including bonds, private equity funds, structure nodes, et cetera. Thank you.
spk00: Thank you. Our next question comes from the line of Chi Yao Huang from Morgan Stanley. Please ask your question, Chi Yao.
spk03: Hi, thank you for giving me this opportunity. I have two questions. The first one is about the brokerage commission rate of 4Q. There is still a relatively obvious increase. I would like to ask the main driving factor in this. And in 4Q, the income contribution of our derivative products in Hong Kong accounts for about what percentage of the entire brokerage income? So, after the year 2023, what kind of level do we think the brokerage commission rate is? Is it a relatively sustainable level or a normal level? The second question is about interest income. As we can see, the interest income of 4Q has increased significantly. I would like to ask the management to introduce a plan for the use of our client-based funds. How much client-based funds can we use? What are the investment structures used for? Also, what are the expectations for the use or scale of our client-based funds in the future? First question is on the driver for higher brokerage commission rating in the fourth quarter, and roughly what's the contribution from the derivative products, and how's the management's outlook on the brokerage commission rating to 2023? And my second question is on the interest income, which we are seeing a rapid growth in the fourth quarter, and so basically I'm wondering how's our plan to utilize the idle cash and what we invest, and what's the and the scale of client or cash that we plan to utilize in 2023. Thank you.
spk01: Thank you. I will take these two questions. Number one, in terms of the commission rate, I think the hike was mainly driven by, you know, our, you know, typical reasons because the market was quite volatile in fourth quarter. The U.S. stock markets, you know, make meaningful corrections. which implies our effective pricing model become much higher. The other reason is, as you mentioned, these derivative tradings continue to increase in the fourth quarter given the market volatility, which also has a positive benefit on our blended commission rate. And in terms of the contribution in fourth quarter, derivative commissions roughly accounts for one-third of our total commission. maintaining a relatively high level in our history. But, you know, as I mentioned in last learning call, we do not set any, you know, top specific targets for our derivative products. Instead, what we focus will be more on the investment education side and also further enhance our products itself. For instance, this year we'll gradually blow out our U.S. option portfolio order functions to attract more of these professional derivative traders. And we are not inclined to push or hard sell these derivative products to these clients with low risk appetite. The second question regarding the interest income, it is very difficult to quantify how much idle cash we can utilize, but it depends on the market volatility. But I can give you some, you know, general range. Say, you know, in our history, the idle cash percentage-wise accounts for roughly, you know, 20% to 10% of our total client assets, different markets. different market conditions. For instance, in the fourth quarter or even in the whole last year, because the market was not very good, actually, you know, our clients' idle cash position, percentage-wise, it was relatively higher. I think, you know, looking forward this year, the interest income will continue to grow on a year-on-year basis, mainly benefiting from the high interest rate environments. And for the deployment usage, actually, we do not have a lot of choice. The reason is, according to the SFC regulations, we can only put clients' idle cash into the bank deposits to the commercial banks with the duration less than six months. Thank you.
spk00: Thank you. Our next question comes from the line of Cindy Wong from China Renaissance. Please ask your question, Cindy. Thank you.
spk06: Hi, thank you for your question. I'm from Washington, D.C. I have two questions to ask. The first question is about the U.S. market. As you mentioned, the U.S. has seen an increase in the number of new customers in the U.S. in the last decade. I'd like to know about the U.S. strategy in the last decade. What changes can we make in the last decade That can be understood as saying So thanks, Nathan, for giving me the chance to ask questions. So I have two questions. First question is related to the U.S. market. So in fourth quarter, the average net asset inflow of new paying clients for their first month of onboarding to increase by 40% quarter over quarter. So what's the U.S. client acquisition strategy in fourth quarter to help the new asset inflow increase? And do you have any expectation in terms of the net asset inflow and the number of new paying client contribution in the U.S. in 2023? So the second question is related to customer acquisition costs. So in fourth quarter, the CAC was actually down 11% quarter over quarter. Can management give us the reasoning behind it? And if this trend will be sustained in first quarter of 2023, and how do we see the 2020 the full year. Thank you.
spk01: Thank you. I will take your second question first. I leave the first question to Liv to answer. For the CAC in the fourth quarter, actually, we further optimize our channel distributions in Hong Kong and also in overseas markets. You know, we adjust certain, you know, incentives to our clients on a dynamic basis. not only just focus on the speed of our client, but also more importantly on the quality of our clients. Going forward, I think, you know, it is still very difficult to predict, you know, 2023 situations. I think our base case will be the CAC largely will be, you know, the same as 2020, 2022.
spk08: Fourthly, we have slowed down the supply and demand rate in the U.S. market. On the one hand, The market sentiment is still weak, affecting the client's will to invest. On the other hand, we are taking the initiative to slow down the pace of goods and services. We hope to put our focus on improving the quality of our customers. In the fourth quarter, the first month of the U.S. assets added to the U.S. stock market has increased by about 40% compared to the first month of the U.S. assets added to the U.S. stock market. This is mainly due to our focus on the acquisition of customer assets and the adjustment of the bonus threshold. In the first quarter, we have already supported the downfall of the U.S. shareholder group in the U.S. So the plan is to further improve high-end extended products such as index shares this year and the corresponding functions. In the future, we will continue to deepen our product power in the United States. The core of the U.S. stock and U.S. stock extended products is to gradually improve the relevant product categories and improve the competitiveness in the local market. At the same time, Client acquisition in the U.S.
spk05: in Q4 slowed down on a sequential basis. On one hand, market sentiment remained weak, which affected clients' willingness to enter the market. And on the other hand, we deliberately slowed down client acquisition to focus on improving client quality. And as mentioned, the first month average net asset inflow from our new paying clients in the U.S. increased by around 40%, mainly because we focused on attracting client assets and adjusted the reward threshold. And in the first quarter this year, we already launched multi-lag options for U.S. stocks, and we plan to add and improve advanced derivative products and functions, such as index options, this year. And going forward, we'll continue to enhance our product capabilities and gradually improve our product portfolio centered on U.S. stocks and U.S. derivatives to enhance our competitiveness in the local market, while also controlling client acquisition costs and focusing on improving client quality. And regarding the guidance, we now have no guidance for the U.S. clients or asset inflow growth in 2023. Thank you.
spk00: Thank you. Our next question comes from Frank Chen from Credit Suisse. Please ask your question, Frank.
spk11: Thank you for the opportunity to ask me a question. My name is Chen Hao, and I'm from Switzerland. I have two questions. The first question is about entering the new market. What are the latest progress and timetables? Are other companies already online in Japan? This is Frank Zheng from Credit Suisse. I have two questions. The first one is on new market entries. What is the latest progress and the timetable? Is the services in Japan already online? The second question is related to interest rate. Fourth quarter interest expense surged quarter on quarter. And we would like to understand, in general, when interest rate is in a up cycle, would the interest rate spread of margin finance and secret spending business be affected, considering that the fee rate income is relatively fixed but the fewer expenses could elevate.
spk01: Thank you very much, Frank. I will take both of your questions. Number one, in terms of the new market expansion, I think you're right. We do have some new markets in our pipelines. In the base case, we are looking forward to expand two new markets. Both are in Asia this year. I think, you know, in terms of total addressable market for these two potential markets will be very meaningful. But in terms of the exact timeline, it is still very difficult to predict nowadays, given, you know, we're still waiting for the regulators' confirmations for our license approval. Hopefully, we will give you some update, more colors in the coming quarters. Second, regarding the interest expenses, I think, theoretically speaking, the spread will be narrowed a little bit, given that our pricing strategy on the margin financing is a fixed rate. But on the funding cost side, it will be impacted from the high interest rate environment. But thanks to our U.S. self-clearing capabilities and also our very strong balance sheet, if you look at our total equity base, you can see actually a lot of margin financing The funding source came from our own money. So therefore, I think, you know, the pressures from the funding cost is still manageable in 2023. Thank you.
spk00: Thank you. Our next question comes from Leon Chee from Daiwa. Please ask your question, Leon.
spk10: Hello, thank you for giving me this opportunity. I'm Leon Chee from Daiwa. I have two questions for Manager Chen. The first one is about Hong Kong. Recently, we have noticed that Hong Kong seems to be more and more implementing some offline services or activities. I would like to ask Manager Chen In terms of strategy, please explain to us how we should understand how we can expand our products and services more and more offline. Does this mean that there will be a lot of help for us to increase our entire customer base? Will it help us to acquire a larger customer portfolio? And then the second question is, can you update us on the latest status of our Hong Kong stock market or our plan? These are the two questions. Let me translate it. hi uh this is bianchi from taiwa uh thanks for taking my questions uh two questions today uh firstly is uh regarding hong kong business uh we noticed that uh recently uh futu has been uh carrying out uh more and more offline uh services um appreciate if your management can give us any color uh how should we think about our offline business strategy in hong kong Does it help us in terms of increasing the customer wallet share in AUM? And second question is regarding your latest plans for Hong Kong listing. Thank you very much.
spk01: Thank you very much, Leo. I will take your second question first, and I will leave the first question to leave to answer. There's no any confirmed timelines or for our Hong Kong IPO listing nowadays. I think the top priority for the management this year is to fully cooperate and collaborate with the Mainland Regulators to complete our inspection as soon as possible. So this is our top priority, and we will further assess the feasibility of our Hong Kong IPO listing later, depending on the market conditions and also depending on our use of proceeds. Thank you.
spk08: Thank you. Fudu's penetration rate among the young people is higher than that of the middle-class people, so we also hope to serve the needs of this part of the customer group that is aging. Compared to the young customers on our platform, Chinese and elderly people are less aware of the Internet, and the transition period will be longer. So we have developed a lot of offline care services in Hong Kong. Through face-to-face communication, we can shorten the transition period of this part of the customer group. At the same time, we also plan to increase the cooperation with KYL through offline activities in many ways to reach these potential target customers in order to increase the number and quality of customers.
spk05: So in Hong Kong, SUTU has higher penetration rate among the younger generations than the middle-aged groups. And we hope to better serve the middle-aged groups of clients. And compared with the younger generations on our platform, we see that the middle-aged groups are generally less tech savvy and have longer conversion cycles. As such, we carried out offline account opening services in Hong Kong as face-to-face communication can shorten the conversion cycle of these clients. And we also plan to reach potential clients through multiple touchpoints, including offline campaigns, cooperation with KOLs, et cetera, so as to improve the quantity and the quality of the clients acquired. Thank you.
spk00: Thank you. As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from the line of Catherine Lay from JP Morgan. Please ask your question, Catherine.
spk02: Sorry, this is Peter asking a question on behalf of Catherine. My first question is about last December, there was an announcement about the tightening of the foreign currency market. I would like to ask, what is the impact of this announcement on FUTU? So let me do the translation. So we understood that there is a CRC announcement on tightening of the offshore brokers. And we wish to understand what's the impact on FUTU's business operation, in particular, does Futu see any current AUN outflow following the CSRC announcement last December? Thank you.
spk01: Thank you, Peter. Let me answer your question. First of all, give you some, you know, general colors about our clients, you know, clients' movement following the end of last year's news flow. We do witness some, you know, our Hong Kong clients because there are some, you know, sentiment concerns. There are some client outflows, particularly in the first half of January. But I think the overall amount is quite manageable. Roughly, I think, you know, the net outflow at the time accounts for roughly 1% to 2% of our total client assets, which compared with the situation we faced And at the end of 2021, we think the situation was manageable. And the net outflow condition, the situation gradually reversed starting from February. And nowadays we record, you know, daily . Secondly, regarding the CSRC's, you know, CSRC's news, at the end of last year. I think, you know, number one is we fully accept the regulators' point of view, and we, you know, we have a full cooperation, you know, with the regulators. On a net-to-net basis, we do think it will be healthy for the industry's long-term growth. And also, if you follow the news, there are some clarities from the CSRC's spokesperson in the middle of February, mentioning how to deal with the existing clients. They ask for orderly deal with the existing clients. It will be an industry-wide situation. So we will take very constructive manners to cooperate with the regulators in this regard. Thank you very much.
spk00: Thank you. Once again, to ask a question, please press star 11 on your telephone. All right, I'm showing no further questions. Thank you very much for all your questions. I'll now turn the conference back to Daniel for closing remarks.
spk05: Thank you, operator. That concludes our call today. On behalf of the FUTU management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you and goodbye.
spk00: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
Disclaimer