Futu is considering alternatives if its New York listing is revoked, as China is cracking down on private enterprises.
Arthur Chen, the CFO of the online broker, said in an interview that the company is looking to expand in Hong Kong, California, Singapore and Australia.
In the next two to three years, internationalization will be an important strategy for Futu. The total addressable market is larger than China or Hong Kong.
The dilemma facing the nation's largest overseas-listed online broker as it waits for clarity from China's regulators is underscored by the global push. Since October, a senior central bank official has questioned the legitimacy of such trading firms.
Millions of local investors have been able to evade capital controls to trade shares in markets such as Hong Kong and New York thanks to Futu and Up Fintech. Leaf Li is a former senior executive at the internet platform company.
People familiar with the matter said in April that Tiger Brokers is cutting about a fifth of its workforce after warnings that allowing Chinese to invest abroad may run afoul of the nation's strict capital controls.
Futu is moving in a different direction. The online broker is increasing its research and development team in order to counteract weaker growth. Revenue fell due to lower stocks trading volume.
The southern technology hub of Shenzhen will see most of the new hires. He said that the company is on target to add 20% more staff this year.
Chen said that Futu has been communicating with Chinese authorities since October.
He said that they were waiting for more policy clarity on this front, and that they were trying to maintain a strategy that ensured stable growth for us by shifting the focus to overseas markets.
As smaller rivals exit the market, Chen expects Futu to gain a bigger share of Hong Kong's market. He said that markets outside Greater China will contribute about one third of the firm's paying clients.
Over 80% of newly added paying clients in the first quarter came from Hong Kong, US, Singapore and Australia, as the company tries to broaden its client base.
Futu is trying to mitigate risks outside of the country. Almost 200 New York-traded Chinese firms are at risk of being removed from the New York Stock Exchange because of the decades-long dispute over allowing US officials to inspect their audits.
While Chen is optimistic that Beijing and Washington can reach an agreement before the deadline, the company won't rule out the possibility of seeking a listing in capital markets outside the US.
As long as we have some more clarity, we need to consider a Plan B. The risk of a delisting will be mitigated by other options.
In the two months after Christmas in the following year, Futu surged more than 400% after a huge bet was placed against it. Almost all of the gains have been surrendered.
With help from Allen K Wan and others.
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