Futu and Tiger Apps Removed in China: Don't Overreact
Futubull and Tiger International apps are set to be removed from Chinese app stores, leading to concerns among investors and clients. I thought it will be good to provide some perspective on the matter.
Firstly, the removal of the apps are contained within China and not affecting users outside of China. It is business as usual as China laws don’t apply outside of its jurisdiction.
To ensure compliance with local laws and financial regulations, brokers need to establish a separate entity when operating in a foreign country. This segregation applies to the accounts as well.
For instance, if a client from Singapore has investments in moomoo or Tiger, their funds would be safeguarded under the provisions of Singaporean law, not Chinese law. The legal protections and regulations offered by Singapore would govern and protect the client's investments.
Furthermore, the apps themselves appear to be segregated. Moomoo caters to international users, while Futubull is designed for users within China. Similarly, Tiger Trade serves the international audience, while Tiger International is tailored for mainland China. Even their forum URLs are separate, with laohu8.com for China and ttm.financial for the international user base.
Thus, international clients can continue to download and update their apps from either Apple App Store or Google Play Store.
Secondly, clients based in China can still utilize the Futubull and Tiger International apps; however, the apps are not currently accepting new users.
Even though the official app stores do not have these apps available, clients can still update them by manually installing APK and iOS files. This method is well-known among Chinese users, particularly those using Android devices, as Google Play Store is not accessible in China. Even if Huawei, Tencent, and other companies do not provide these apps on their respective app stores, clients can always download them using APK files.
Therefore, China clients can trade without any limitations.
Thirdly, both Futu and Tiger have diversified their presence in other markets, reducing their reliance on the Chinese market.
For instance, in the case of Tiger, the number of new funded customers from outside mainland China has exceeded those from within China since 2021. Over the past year, more than 90% of new funded customers originated from global markets such as Singapore, Australia, and New Zealand.
Similarly, Futu has established a presence in Singapore, the United States, and Australia.
However, the breakdown of revenue by geography has not been disclosed by either company.
Naturally, this news has not been well-received by investors, as nobody wants their invested companies to face restrictions.
During pre-market trading, the share prices of Futu and Tiger experienced declines of 8% and 9% respectively. However, by market close, both companies managed to recover slightly, ending the day with losses of 4% for Futu and 7% for Tiger.
I expect the financial impact to be minimal except for limitations on new client growth in China. Consequently, the situation might not be as unfavorable as perceived by many.