Futu Holdings: Resilient growth amid regulatory tightening; near-term momentum strong

Research evidence excerpt

Futu Holdings: Resilient growth amid regulatory tightening; near-term momentum strong

Takeaways from post‑results meetings

Regulation update

Regulation - uniform tightening, no forced closures: Management framed the

tightening as a high-level, industry-wide action (8 ministries), not broker-specific. The

two-year window is a transition period, not forced account closures, implying gradual

adjustment rather than abrupt disruption. Futu had already halted new Mainland account

openings and expects minimal impact on its 800k new funded account guidance for

2026.

Mainland exposure – manageable share: Mainland Chinese clients represent ~13% of

Futu’s funded accounts, ~17% of client assets and ~20% of revenue as of 1Q26,

underlining manageable direct reliance on onshore business.

Client outflows - manageable, panic largely subsided: Post-regulatory action net

outflow is ~0.5-1% of total client assets, comparable to late-2022 levels. Outflows were

front-loaded (few days) and have already declined sequentially, suggesting sentiment

stabilization.

Funding & ratings - stable: Credit lines remain intact post-regulatory developments,

with no changes in funding costs or bank partnerships. Management is confident S&P

will reaffirm a strong credit rating, indicating supportive creditor sentiment.

Mainland business - remains operational (for now): Revenue from Mainland clients

can still be recognized. Detailed implementation rules are not yet enforced and domestic

buying is still allowed (currently). In the future, Mainland clients’ selling will continue to

generate commissions, while idle cash and securities will still produce interest income.

Compliance stance – strict: The firm will adopt strictest enforcement (e.g., no VPN