Magic 2020s B side: stock market booming, internet securities companies take off

category:Finance
 Magic 2020s B side: stock market booming, internet securities companies take off


Li Xiaoya is an electricity merchant. At the end of 2019, Alibaba was listed on the Hong Kong stock exchange for the second time. He opened a Hong Kong stock account to participate in the new venture. Later, he saw that pinduoduo had a good rise and opened an account to speculate in US stocks.

Li Xiaoya is just a microcosm of peoples gold rush in the stock market in 2020.

In particular, on the one hand, the number of confirmed cases of the epidemic is increasing, reaching 13 million as of November 27; on the other hand, the Dow Jones industrial index is soaring, breaking through 30000 points for the first time on November 25.

Most of Lis earnings come from US stocks. Exactly, from the few stocks he bought. Several companies, such as pinduoduo and sealimited, which he bought, have a huge increase in 2020.

In the context of the bull market in the US stock market, making money seems as simple as drinking water and eating. Li Xiaoya found that not only did she make money, but most of the people who speculated in American stocks made a lot of money.

This is the reality. According to the trend of the Dow Jones industrial index, even a person who does not understand stocks can still earn 64% of the income if he buys with the Dow Jones ETF in March 2020. If it is an eye-catching veteran stock speculators, step in a few big bull stocks, the income will be more amazing.

Internet securities companies make profits

Stock market takes off, let the day of stockjobber also happy.

On November 19, futu securities released its third quarter 2020 results, with total revenue of US $122 million (about HK $950 million), a year-on-year increase of 272%, almost equivalent to the full years performance of 2019, with annual revenue of HK $1.06 billion (US $140 million).

In terms of profit, futu securities in this quarter is far more than the whole year of 2019. In the third quarter of 2020 alone, futus net profit reached HK $401.7 million (US $51.8 million), an increase of 18 times over the same period last year, and 2.23 times of the full year net profit of HK $180 million (US $23.3 million) in 2019.

Picture from Fortune Securities

On November 25, tiger securities, another listed Internet brokerage, also released Q3 financial report, with revenue of 38.04 million US dollars, a year-on-year increase of 148.2%; during the same period, it realized a net profit of 4.86 million US dollars, which turned losses over the same period in 2019, and also increased by 89.8% compared with the second quarter of 2020. Since 2020, all three quarters have achieved positive profits.

The picture is from tiger securities

Futu and tigers financial reports in the first three quarters of this year are so eye-catching. The primary reason behind this is the booming Hong Kong and US stock markets.

Specifically, the revenue of futu securities mainly comes from Trading Commission and handling fee income, interest income and other income (including wealth management, enterprise service business, etc.). Among them, the Trading Commission and handling fee income accounted for the largest part. The brokerage commission and handling fee of futu Q3 was 72.7 million US dollars (about HK $560 million), with a year-on-year increase of 358.6%, accounting for 59.5% of the total revenue.

Tiger securitiess revenue structure includes commission income, margin trading and interest income, and other income. In the third quarter, its commission income reached 19.5 million US dollars, an increase of 211.9% year-on-year, accounting for 51.3% of the total revenue, which is also more than half of the total revenue.

The growth of commission income is mainly driven by two flywheels: the increase of user scale and the expansion of user transaction scale.

In the third quarter, tiger securities had a net increase of 142000 customers to 976000, and broke through the 1 million mark at the end of October; the net increase of deposit customers was 47000 to 215000, which was 7 times of the same period of last year, setting the fastest quarterly growth rate in the companys history.

In the third quarter, the average daily income transactions of futu securities customers reached 379000, a year-on-year increase of 273%. For the first time in the quarter, the turnover exceeded HK $100 billion, to HK $1014.7 billion (about US $130.9 billion), up 381% year-on-year. Among them, the trading volume of US stocks amounted to US $72.8 billion (about HK $564.5 billion), the trading volume of Hong Kong stocks was HK $436.2 billion, and that of mainland stock was HK $14 billion.

As of the end of the third quarter, the total assets of futu customers reached HK $2009 billion, an increase of 177.8% over the same period last year and 41.1% over the previous quarter. The retention rate of quarterly paid customers exceeded 98% for the seventh consecutive quarter.

Tiger securitiess total trading volume in the third quarter was 62.81 billion US dollars, up 143.8% year-on-year, and total customer assets at the end of the quarter

It reached US $10.9 billion, up 188.1% year on year.

In addition to the booming trading of Hong Kong and US stocks, the booming IPO of the two cities has also led to the development of investment banking business and margin trading business of the two companies, thus improving their overall performance.

Futu securities chairman Li Hua said in the financial report that the strong IPO market is beneficial to futu. In the third quarter, futu participated in the IPO of several enterprises in the US or Hong Kong stock market, such as Xiaopeng automobile, shell house search, Nongfu Shanquan, Yale technology and Qinhuai data. Among them, six IPOs with subscription amount of more than HK $10 billion.

Specifically, the total subscription amount of futu platform Nongfu mountain spring was as high as HK $35.1 billion, and the number of subscribers exceeded 116000; Xiaopeng auto Co., Ltd. received 46000 subscription from futu, with a total subscription amount of 2.21 billion US dollars; and fucu 27000 people subscribed for shell house, with a subscription amount of 1.74 billion US dollars.

Tiger securities also disclosed that it participated in the listing of eight companies in the third quarter. At the same time, as the investment bank that underwrites Xiaopeng automobile and ideal automobile, it contributed 2.4 billion US dollars and 1.887 billion US dollars orders respectively.

The prosperity of the stock market also led to the development of margin trading business of the two companies, and the interest income increased significantly.

According to the financial report, as of the end of the third quarter, the balance of margin trading and securities lending of futu securities reached HK $12.6 billion, up 171.3% year-on-year. In the third quarter, futu realized interest income of $36 million, up 139.9% year-on-year.

During the same period, the balance of guaranteed financial assets and securities loans of tiger securities reached US $2 billion, up 109.4% year-on-year, and the interest income during the period was $8.1 million, up 36.8% year-on-year.

Wealth management business also contributed more to the revenue and profits of the two Internet securities companies.

Tiger securities also provides two wealth management products, namely idle money housekeeper and fund mall. The data shows that the number of idle money housekeepers opened in Q3 has increased by more than three times in the quarter, while the fund supermarket has expanded to 133 funds at present.

Although Internet securities companies, which mainly aim at Hong Kong and US stock markets, have developed for many years in China, they have been small businesses for a long time in the past.

In the view of most investors, internet securities companies are facing two major obstacles. On the one hand, securities business is a license plate business, and state-owned securities companies have always occupied a dominant position; on the other hand, Internet born teams are too cross-border in securities business, and no one believes that futu has the ability to do securities business well alone. Even Ma Huateng, Li Huas former boss, was not optimistic about the business.

Li Zhuyan, vice president of Jingwei in China, said that futu used to run a wedding photography studio with Li Hua and his wife in the early stage to provide financial subsidies. On several occasions, futu also relied on Li Huas own stock market earnings to pay his salary.

However, Tencent finally invested in futu, and it has invested three times in a row. When futu IPO in 2019, Tencent held 30.3% of the shares and 26.2% of the voting rights.

With the continuous improvement of domestic investors awareness of overseas stock market, in recent years, more and more players begin to grab this business.

In October this year, the media reported that Internet brokerage Changqiao securities received tens of millions of US dollars in pre-A + rounds of financing, led by old shareholders Yuanjing capital and Huili capital.

Prior to this, Changqiao securities has completed several rounds of early financing, and the main investors include Ali investors such as Wang Gang, Ma Changwei and Lu Zhaoxi.

According to public information, Changqiao securities was established in March 2019. The core founding team of the company is from Alibaba, covering Taobao, Ali mom, Alibaba cloud and other businesses; the financial and trading team is from Huili in Singapore, Noah wealth in Hong Kong, Hang Seng electronics and other enterprises. At present, the team has nearly 200 members and more than 100000 registered users.

In addition to Changqiao securities, there is also an Internet brokerage named Huasheng securities, which has indirect connection with ALI. According to public information, Huasheng securities was founded in 2010 and is an internet securities company under Sina. However, they only started to carry out C-end securities business relying on the Internet in 2016, mainly engaged in the trading of Hong Kong and US stocks, and obtained the securities dealers licenses in New Zealand and Hong Kong. The companys institutional business includes IPO, debt financing, M & A, ESOP solutions, consulting and investor relations services in Hong Kong and the United States.

According to 36kr, from January to September 2020, Huasheng participated in six U.S. stock IPOs, all of which were new economy companies, and participated in 14 institutional businesses with international placements. In the largest international placement, the total issue size exceeded HK $13 billion.

Huasheng securities achieved a single month profit in 2020, followed by a single quarter profit in the third quarter, and is likely to make a profit for the first time this year.

In the last three months of 2020, all the e-mails sent to the chairman of Huansheng Securities Co., Ltd. increased by more than 20% in the most recent three months of 2020, and the number of customers sent to Huansheng securities increased by 10%.

In May 2017, snowballs Internet brokerage brand Xueying securities officially appeared. According to the official statement, Xueying securities is a Hong Kong US stock brokerage established by snowballs overseas shareholders. Xueying securities supports trading in multiple global financial markets, including Hong Kong stocks, US stocks and A-shares, and provides financial trading services for a variety of products including stocks, options, funds, etc., to help investors realize global asset allocation.

So far, Xueying securities has successively participated in the listing of many enterprises, such as ideal automobile, shell, Xiaopeng automobile, meituan, Xiaomi, etc., to provide investors introduction, stock sales and other services for these enterprises.

Recently, all-weather technology has learned from people close to snowball that snowball is preparing to go public. Snowball also revealed that there was a listing when she interviewed some job seekers..

The source said that the information he got was that snowball may have signed a gambling agreement with some investors in order to go public, facing greater commercial pressure. Therefore, he recently recruited some senior media personnel from some media to be responsible for the commercialization business.

Another person in the circle of Internet securities companies also mentioned that it is normal for snowball to seek listing. Tiger securities is also listed. If its (snowball) data runs well, it is a normal choice to choose to be listed.

In response to the news, all-weather technology and snowball verified, but as of the press, the other side did not respond positively.

Increasingly fierce competition and the direction of continuous exploration

In terms of scale, futu securities ranks first, tiger securities ranks second, and other securities companies are still small at present.

In terms of trading volume, in Q1 of 2019, the trading volume of futu securities is only 1.02 times of tigers, and there is not a big gap between the two sides. However, by the end of Q3 in 2020, the total trading volume of futu securities has reached 2.08 times that of tiger securities.

In terms of revenue and net profit, in Q3 2020, futus revenue is 3.2 times that of tiger, while the net profit of futu is 13.5 times of that of tiger.

Why is the gap between the total trading volume of the two sides only twice and the net profit gap as high as 13 times?

There are some differences between the business models of futu and Tiger: Tiger securities cooperates with Yingtou securities, another American securities firm, at the bottom level, which is the full disclosure broker of Yingtou. It can be understood that tiger securities and Yingtou securities cooperate to carry out stock brokerage business, and tiger conducts diversion to Yingtou securities.

In essence, the user is registered in Yingtou securities. With the help of Yingtou securities, investors can invest in American and Hong Kong stocks in tiger securities, and tiger gets commission from Yingtou securities.

This means that for Internet brokers, the license is a crucial resource. In fact, futu and tiger have been licensed around the world in recent years.

Picture from Fortune Securities

Li Hua, founder of futu, said, I always think that finance is a very serious matter. We must choose to actively accept supervision and actively embrace supervision. Only in this way can enterprises with financial attributes go very steadily.

Tiger securities is also actively in the layout of licenses. In August this year, its wholly-owned subsidiary in the United States obtained five U.S. financial licenses issued by FINRA, including investment research, securities proprietary trading, U.S. government securities brokers, brokers or dealers selling corporate bonds, and 15-6 (assisting foreign brokers to distribute their research reports to U.S. institutional clients and execute foreign securities transactions).

Up to now, it has obtained 29 securities licenses or qualifications in the United States, Australia, Singapore and other countries and regions.

The picture is from tiger securities

In July 2019, tiger securities acquired the self clearing license through the acquisition of the old American securities firm marsco. Wu Tianhua, the founder and CEO of tiger securities, said at that time that winning the clearing license would greatly improve the user experience of the product.

In August this year, Huasheng securities obtained the financial license (No. 5) issued by the Hong Kong Securities Regulatory Commission (SFC) to advise on futures contracts. In this way, Huasheng securities will have the opportunity to provide customers with investment advice on selling or buying futures contracts in Hong Kong, and issue research reports or analysis on futures contracts.

According to the official website, at present, Huasheng securities holds a total of 5 types of financial licenses (1 / 2 / 4 / 5 / 9) granted by the Hong Kong Securities Regulatory Commission. It has the qualification of securities trading, futures contract trading, providing opinions on securities, providing opinions on futures contracts and providing asset management.

In order to enhance their competitiveness, internet securities companies are developing to one-stop investment service platform, committed to providing users with one-stop services from information, research and report, communication community, trading and so on.

Futu securities, which is good at trading, has also changed a lot in terms of community and content in recent years. Its futu Niuniu app not only provides users with traditional brokerage business and wealth management business, but also provides information, market data and real-time quotes, social networking and other functions and services. Futu securities insiders mentioned that the goal of futu securities is to create the best content in the industry.

Futu securities has created a bull circle with daily active users (dau) of more than 500000 and daily UGC content production of more than 100000.

Tiger securities also said that it is different from a simple trading platform, but has constructed an investment closed-loop ecology including information, market prices, orders and social networking. Tiger community can provide users with an open platform for online sharing of investment strategies and opinions, as well as professional investment and education contents such as real-time information, open classes, and financial report and stock analysis,

Snowball, which started from the community, is also trying to introduce more abundant content, from the earliest investment community to a one-stop community platform for high net worth users to exchange and trade, and to provide more abundant services. In snowball, in addition to UGC content produced by users, snowball is also constantly introducing more and more institutional media and we media content.

In early 2020, snowballs egg roll Fund announced the formal establishment of the egg roll Index Fund Research Institute. It is understood that the research institute regularly produces industry research reports, practical hot articles, index teaching audio courses, etc.

According to Zhang Ting, Sinas microblog community can help Huasheng securities expand its social + securities financial services. Huasheng has signed hundreds of financial giants on Weibo, with tens of millions of fans covered by the matrix. He said that through the microblog port, Huasheng securities provides investors with an investment exchange platform and experience of Hong Kong, US and a shares. Many customers can communicate with big V in real time, quickly share their investment experience and seize investment opportunities.

According to 36kr, CEO Zhu Liangliang of Changqiao securities once said that compared with the traditional way of pushing land in the early stage of industry development, Changqiao has attracted new users by means of KOL and Koc. Changqiao is also gradually building Changqiao community. In October 2020, its investment social module circle will be launched. KOL can establish private traffic ecology by establishing circles, providing long-term paid articles and investor education.

Now, another issue that Internet brokers need to consider is how to achieve stable growth in the next step. To some extent, internet securities companies are an industry that depends on heaven. When the market is booming in a bull market, securities companies can also get good performance, while bear market trading is low, the performance of securities companies is naturally affected.

In order to master more initiative, internet securities companies mainly adopt two kinds of countermeasures. One is to expand the coverage of overseas markets, cover more exchanges and more investor groups, and put eggs in more baskets.

Wu Biwei, President of futu securities finance and enterprise services, told all-weather technology that the development of futu securities performance this year mainly benefited from Hong Kong and US stocks, especially the substantial increase of customers in Hong Kong.

Futu securities will definitely take the road of internationalization in the future, he said. Futu securities has a license plate in the United States and a license plate in Singapore. In the future, futu securities will do business in the United States and the business in Southeast Asia covered by Singapore.

Wu Biwei believes that the future users of futu securities must be overseas investors, not just Chinese. Its just Chinese. This business is not big. just like tiktok, its popular overseas because technology has no boundary. .

In Singapore, tiger securities has set up a localized management and operation team, increased English information and other functions through investment in technology and R & D, and established an English customer service team.

According to the financial report, in the third quarter of this year, the number of overseas customers of tiger securities has accounted for 20% of the new customers.

The picture is from tiger securities

Long bridge securities is also actively expanding its overseas business. Zhu Liangliang, CEO of the company, said that long bridge will probably catch up with the trading depth of its friends in the next 6-9 months. In addition to the Hong Kong and US stocks it aims at, Longbridge has so far completed the access to eight major global financial markets, including the United States, Hong Kong, Shanghai and Shenzhen, Singapore, Germany, Japan, the United Kingdom and Australia, supporting more than 32000 gold medals in five categories, including stocks and ETFs Transactions in financing assets.

In order to obtain stable growth, the second strategy adopted by internet securities companies is to expand their business scope.

Financial reports show that futu securities and tiger securities are also striving to develop other businesses in addition to securities business, such as investment banking business, ESOP (employee stock ownership plan) business, wealth management business, etc. These businesses account for about 40% and 50% of revenue, respectively.

Picture from Fortune Securities

At present, snowball also has a number of products. In addition to snowball net and Xueying securities, it also has two independent products: egg roll fund and snowball stock.

Take the egg roll fund, a fund sales platform launched in 2016, as an example. It is independent of snowball and has a complete function of app. The egg roll fund relies on snowball to influence and cultivate users through snowball content, so as to guide investors to purchase products in egg roll fund, and support the purchase and transaction of more than 6000 public funds. Long bridge securities is also expanding diversified business. In addition to the layout of securities and content community, there is also an important business of wealth management. Long bridge Securities said its securities line will focus on expanding the depth and breadth of transactions, while the goal of wealth management business is to provide general investors with services and products unique to private banks. In the early stage, foreign currency funds and bond funds have been introduced, including stock funds and bond funds. Source: Wall Street, editor in charge: Chen Hequn_ NB12679

Take the egg roll fund, a fund sales platform launched in 2016, as an example. It is independent of snowball and has a complete function of app. The egg roll fund relies on snowball to influence and cultivate users through snowball content, so as to guide investors to purchase products in egg roll fund, and support the purchase and transaction of more than 6000 public funds.

Long bridge securities is also expanding diversified business. In addition to the layout of securities and content community, there is also an important business of wealth management.

In the early stage of its launch, Changqiao securities introduced the foreign currency monetary fund product yue Tong. At present, the products provided include monetary fund, bond fund, stock fund, etc.