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.

This is the most correct decision made in recent years, he lamented. These impulsive moments have brought him huge returns. He calculated that from the end of last year to now, his return on Hong Kong and US stocks has reached 680%.

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

Looking back at 2020, the stock market and reality have become almost two planes of the world - how magical the reality is, how enchanting the stock market is.

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.

Under the prosperity of the stock market, it is not only individual investors who make money, but also Internet brokers who provide services for them.

Internet securities companies make profits

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

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

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.

From the perspective of their revenue structure, they are similar with little difference. The main sources of revenue are Trading Commission and handling fee.

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.

Futu financial report shows that by the end of Q3, the number of registered users of futu Niuniu app reached 10.4 million, up 52% year-on-year; the number of open accounts of futu reached 1.173 million, up 80% year-on-year. It is worth noting that the number of clients with assets increased rapidly by 115000 in the third quarter, nearly double that in the whole year of 2019 (66000). As a result, by the end of the quarter, Fortis securities had 418000 customers with assets, up 137% year-on-year.

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.

Along with the increase in the number of customers, there is also an increase in the scale of capital transactions.

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.

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.

Futus financial report shows that nine new partners, including Morgan Stanley, Jingshun and Paris asset management, have been added to its elephant wealth Q3. There are more than 30 fund company partners with an average daily asset size of US $1.05 billion (HK $8.15 billion). As of the end of the quarter, more than 29000 customers have purchased financial products on the platform.

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.

Increasingly crowded Internet Securities Market

Take futu as an example. In 2012, Li Hua officially established futu securities in Hong Kong, but encountered many difficulties in financing.

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.

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. They started trading in Hong Kong and the U.S. only in 2016 did they start trading in Hong Kong and New Zealand Securities companies. 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 an email sent to all members of Huasheng securities in October this year, Xu Ge, chairman of Huasheng securities, mentioned that in the last three quarters of 2020, Huasheng Trading customers increased by 5-digit, and the monthly average growth rate was above 20%.

In addition, snowball, an investment exchange and trading platform for ant financial services, is also one of the players of Internet securities companies.

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.

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.

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.

However, judging from the latest market value, there is still a big gap between the two companies. So far, the U.S. stock market value of futu holdings is close to $5.9 billion, which is about 6-7 times that of tiger (US $880 million).

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.

As of Q3 this year, futu securities has held 31 financial licenses and qualifications in Hong Kong, the United States, Europe and Singapore.

Picture from Fortune Securities

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).

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.

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.

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.

In contrast, Huasheng securities focuses more on the use of resources from Sina in terms of content. The huashengtong app developed by them is also a one-stop service platform for Hong Kong and US stocks integrating market, trading, information and community.

Zhang Ting, CEO of Huasheng securities, once told the media that sina, in addition to financial support, has also given great help in resources. Huasheng securities has used the flow advantages of microblog and sina finance to carry out information sharing, community interaction, brand promotion and other operations.

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.

Long bridge securities, which is positioned as a social securities brokerage service provider, is also expanding its users by focusing on social networking and content. Changqiao Securities said that it has built a unique, most complete and personalized content module and social platform circle in the industry such as fundamentals and information.

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.

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. .

Tiger securities also disclosed the progress of its overseas strategy in its financial report: it has obtained permission to operate in the United States, Singapore, New Zealand and Australia, and has provided stock trading services listed in Singapore and Australia for clients since Q3.

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.

Wu Tianhua, CEO of tiger securities, predicts that in the next 12-24 months, overseas customers, including Singapore, will account for more than half of the companys new customers.

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.

Wu Biwei said that although the business of futu securities is still mainly to obtain Trading Commission, it can also be seen that its wealth management business is booming. In addition to selling funds, they also increased the sales of derivatives such as futures. These businesses can help us smooth out the trading fluctuation curve.

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 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. 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 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 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.