Terry
Private Fund Portfolio Manager & Trader
China's crackdown on illegal cross-border brokers such as Tiger, Futu and Longbridge is milder for Hong Kong stocks than it looks, and likely positive longer term. Existing accounts can only sell for two years, so selling is gradual rather than a stampede, and legal channels like Stock Connect, QDII and Wealth Connect are untouched. Once old positions clear, that money should return via compliant southbound flows, adding liquidity. The hit falls mainly on the brokers' own shares. x.comÂ
Hong Kong stocks are among the best destinations for global money, combining low valuations, high dividends, steady inflows and a repricing of Chinese assets. Southbound buying hit a record HK$37.2B on March 9 after a sharp drop left quality assets cheap. The Hang Seng trades near 12-13x earnings, versus 20x-plus for the US and 22x-plus for Japan. Iran turmoil has dented Dubai as a haven, Middle East inquiries about Hong Kong family offices rose 50%, and regulators are curbing insider trading. … Show more
Futu and UP Fintech's Tiger Brokers face what should be unprecedented penalties that strip their onshore gains and clear out illegal existing business in mainland China. Regulators will confiscate all illegal gains of the onshore entities of Tiger, Futu and Longbridge and set a two-year concentrated rectification period to clear out illegal existing business. Neither is one to buy on the news. x.com x.comÂ
China's ban on offshore brokers serving mainland residents means a long-term liquidity drain for Chinese ADRs and Hong Kong stocks. Eight ministries jointly barred foreign institutions from cross-border securities services; existing users can only sell for two years before forced account closure, and Futu was fined up to 1.85 billion yuan. With mainland retail investors' route overseas sealed off, new money will find it increasingly hard to enter these markets. x.comÂ
China is following the policy path the US and Europe took over a decade ago, which should drive a sweeping structural bull market in Chinese equities spanning several Kitchin cycles. Per @baoshu88, China is moving away from GDP-only targets, with fiscal discipline narrowing the cumulative deficit for the first time in over two years and new hidden local government debt now banned. Lower macro cyclicality and volatility should pass into equities, steadily compressing Chinese stocks' volatility. … Show more
Futu and UP Fintech's Tiger Brokers face a regulatory threat to their core mainland Chinese business. China's CSRC and seven other government departments launched a crackdown on illegal cross-border securities, futures and fund business, opening investigations and issuing advance penalty notices against Futu, Tiger Brokers and Longbridge. They are accused of providing brokerage, margin financing, fund sales and futures services to mainland investors without approval. x.comÂ
Hong Kong equities look weak for three reasons. Overseas capital is not returning as strongly as media suggest, equity fundraising in Hong Kong has surged, and southbound inflows from mainland China are far weaker than before. x.comÂ
Futu's valuation logic has changed after China's proposed RMB 1.85 billion penalty, about $270 million or roughly 15% of a year's net profit, plus RMB 1.25 million for founder Li Hua. Per JPMorgan, which cut its target from $300 to $87 and downgraded to neutral, Futu is now a regional licensed broker, not a high-growth fintech, so its growth premium is largely gone. Mainland accounts are just 13% of the total. The May 28 Q1 report on the mainland wind-down and overseas growth is the key test. … Show more
Chinese stocks should benefit from the development raised in a post the author replies to, though which individual name to pick is unclear. x.comÂ
Chinese stocks are back in a secular bear market, and a break of the USD/HKD peg, now nearing 7.85 again, would trigger financial armageddon. China large caps failed to hold above their monthly 200-period average, the Hang Seng is retesting key trend, and Hong Kong 10-year yields are rising. China has led global markets by about three quarters: it peaked in 1Q21 before US stocks and gold in 4Q21, and its bounce peaked in 4Q25, pointing to global weakness from 2Q26. This bet could be wrong. x.comÂ
Interactive Brokers' 31% account growth is no one-quarter phenomenon, because retail trading is increasingly international and less US-centric. With under 5 million accounts versus Robinhood's roughly 27 million, it could add 3 million in a year or even beat Robinhood's 10 million in 2021, as traders now accept less user-friendly platforms, as Polymarket shows. Its valuation is no longer anomalous versus peers, but modest multiple expansion and a few more such quarters point to roughly 2x. x.comÂ
