Futu Holdings Quantifies Mainland China Client Outflows at Mid-Single Digits, Signals Worst Is Behind It
Q2 2026 earnings call held August 20, 2026, following release of second-quarter results
Futu Holdings delivered a quarter that beat consensus by a wide margin, but the number investors had been waiting for arrived only in the Q&A: how much client money left the platform after Beijing's May 22 crackdown on mainland access to offshore brokerages. Management said the cumulative asset outflow since the new rules came into effect amounted to a mid-single-digit percentage of total client assets, split roughly evenly between mainland and Hong Kong clients, with the bulk of the damage already absorbed in the second quarter. Chairman and CEO Leaf Li, speaking through a translator, said the mainland outflows were "primarily compliance-driven adjustments under the new rules," concentrated in June and July as the app restrictions were rolled out, while Hong Kong outflows reflected "some risk-off sentiment as the market digested the news" in the immediate aftermath of the announcement. Crucially, Li said the pace of attrition "started to moderate in August," and Hong Kong client retention held above 98% for the quarter, with overseas retention stable sequentially. This is the first time management has put a number on the regulatory overhang that has weighed on the stock since May, and the mid-single-digit figure will likely be read as better than feared by a market that had been pricing in more severe mainland account closures.
Record trading volume and margin book offset take-rate compression
The underlying business printed strong numbers even before the regulatory narrative is considered. Total revenue rose 36% year-over-year to HKD 7.2 billion, net income climbed 42% to HKD 3.6 billion, and net margin expanded to 50.6% from 48.4% a year earlier. Total trading volume hit a record HKD 6.42 trillion, up 78.8% year-over-year and 54.6% quarter-over-quarter, with U.S. stock volume jumping 67.2% sequentially on AI-related trading interest. Margin financing and securities lending balances rose 31% quarter-over-quarter to HKD 95.1 billion, driven by an active Hong Kong IPO calendar and clients taking on more leverage. The one soft spot was blended commission rate, which CFO Arthur Chen attributed not to any pricing changes but to mix shift: clients concentrated trading in "high-value AI names and tech leading names" in the U.S., which carry lower implied commission rates than the broader book, while derivatives contribution ticked down slightly quarter-over-quarter, though Chen said it "is still very healthy" on an absolute basis.
Overseas expansion moves into Thailand as Malaysia breaks even
Futu is treating its overseas footprint as the primary growth engine now that mainland China is a shrinking pool. The company has secured a Type A securities license from Thailand's SEC, its fourth Southeast Asian market alongside Singapore, Malaysia and the broader ASEAN push, though management declined to give a launch date, noting it still needs "regulators' readiness and inspection to receive final approval." More notable was the profitability disclosure: Singapore passed breakeven "a couple of years ago" and continues to see margin expansion from operating leverage, and Malaysia has now also reached operational breakeven after leading all markets in net new funded accounts for three consecutive quarters. Malaysia and Hong Kong together accounted for more than half of net new funded accounts in the quarter, and moomoo's share of total funded accounts across the group climbed to nearly 60%, led by Singapore, Malaysia and the U.S. Average client assets rose sequentially in every overseas market where Futu operates, which management framed as evidence of wallet-share gains on top of account growth, not just client acquisition.
U.S. prediction markets cross the $200 million mark in first month
Futu's newest U.S. product line delivered an early signal worth watching. After receiving an FCM license from the CFTC in May, moomoo U.S. launched prediction market trading for retail clients in early June, and event contract volume exceeded $200 million within the first month. Chen described the cross-sell effect as the more important finding: "users who trade event contracts are more active in security trading, showing that event contracts are not a substitute for security trading, but rather a driver of it." Management was explicit that the U.S. rollout is as much about building operational and risk-management muscle for prediction markets as it is about near-term revenue, with plans to extend the product to other regions where Futu already operates.
Early Q3 trends point to a cooling-off after Q2's record
Management did not sugarcoat the current quarter. Li said key metrics are "trending modestly softer against the backdrop of market volatility," with net new funded account additions moderating versus Q2, net asset inflows in Hong Kong and overseas markets normalizing after an elevated Q2, and total trading volume down modestly sequentially, which he attributed to cooling retail sentiment. Customer acquisition cost also crept higher, reaching roughly HKD 2,600 in the quarter — within the full-year guidance range of HKD 2,500 to HKD 3,000 — but Li flagged that CAC trended even higher in July, partly a mechanical effect of lower net new accounts amid the regulatory disruption and partly a function of the company maintaining brand spending to protect long-term client lifetime value. Separately, Futu became the first Hong Kong broker to offer securities-backed margin financing for virtual assets under an upgraded Type 1 SFC license, and is exploring extending its unified buying-power framework to digital asset holdings, a small but notable step in bridging traditional and crypto-adjacent product lines.