Q1 2024 Futu Holdings Ltd Earnings Call
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Operator: Hello ladies and gentlemen, welcome to Futu Holdings' first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. This conference call is being recorded. If you have any objections, you may disconnect at this time. I'd now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to the CEO and Head of IR at. Please go ahead, sir.
Speaker Change: Hello, Ladies and gentlemen, and welcome to food to holdings first quarter 'twenty 'twenty four earnings conference call.
Speaker Change: At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
Speaker Change: Today's conference call is being recorded if you have any objections you may disconnect at this time.
Speaker Change: I'll like to turn the conference over to your host for today's conference call Daniela Chivas self to C O and head of IR at through two please go ahead Sir.
Daniel Yuan: Thanks, operator. And thank you for joining us today to discuss our first quarter 2024 earnings results. Joining me on the call today are Mr. Li Flea, Chairman and Chief Executive Officer, Author Chen, Chief Financial Officer, and Robin Xu, Senior Vice President.
Thanks, operator, and thank you for joining us today to discuss our first quarter 2024 earnings results. Joining me on the call today are Mr leaf Li Chairman and Chief Executive Officer, Arthur Chen Chief Financial Officer, and Robin shape Senior Vice President.
Daniel Yuan: As a reminder, today's call may include four looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside the company's control. We caution you that a number of important factors could cause actual results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report. With that, I will now turn the call over to Leif. Leif will make his comments in Chinese, and I will translate.
Speaker Change: As a reminder, today's call may include forward looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside the company's control forward looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those.
Speaker Change: Any forward looking statements for more information about the potential risks and uncertainties. Please refer to the company's filings with the SEC, including its annual report.
Speaker Change: With that I'll now turn the call over to leaf leaf will make his comments in Chinese and I will translate.
Li Xu: Thank you all for attending today's ADR meeting. Sponsored ADR Class A: Our asset client count has increased by 24%, reaching about 1,900,000 in the first quarter. Our asset client count has reached 1,770,000, has grown three times in the same period as last year, and is the third-highest asset client competition in history. In the first three months of this year, we achieved more than half of the sales volume of 350,000 units in a year.
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Li Xu: According to this, we will temporarily increase the target of this year's annual competition for assets to 400,000. However, although the number of asset clients has expanded rapidly this quarter, our quarterly asset client flow rate is still below 98%.
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Daniel Yuan: Thank you all for joining our earnings call today. Sponsored by Strong Market Performance and Solid Execution New Markets, we wrapped up the quarter with approximately 1.9 million paying clients, representing 24% growth year-over-year. In the first quarter, we added 177,000 paying clients, which more than quadrupled from the year-ago quarter, marking the third highest quarterly growth in history. Three months into the year, we have already achieved over 50% of our full year guidance of 350,000 net new paying clients. Given the year-to-day momentum, we would like to raise this guidance to $400,000 for now. Additionally, despite the rapid expansion of our client base, our quarterly paying client retention rate remained above 98%.
Speaker Change: Is that back in the Jewish body shop. Thank you all for joining our earnings call today bolstered by strong market performance and solid execution, new markets, we wrapped up the quarter with approximately $1 9 million paying clients, representing a 24% growth year over year in the first quarter, we added 177000 paying clients.
Speaker Change: Which more than quadrupled from the year ago quarter, marking the third highest quarterly growth in history three.
Three months until the year, we have already achieved over 50% of our full year guidance of 350000, net new paying clients given.
Speaker Change: Given the year to date momentum, we would like to raise the guidance to 400000 for Enel <unk>.
Speaker Change: Despite the rapid expansion of our client base, our quarterly paying client retention rate remained above 98%.
Daniel Yuan: Hong Kong and Singapore's speedy recovery has led to a double-digit recovery. However, due to the fact that other markets have achieved a stronger 3-digit increase in return, their contribution to the group's competition for the number of asset clients has dropped to about one-third. Client Acquisition
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Daniel Yuan: Client acquisition Hong Kong and Singapore both accelerated to double-digit sequential break-even. Yet their contribution to new paying clients dwindled to around one-third amidst strong triple-digit new paying client growth in other markets.
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Speaker Change: Client acquisition, Hong Kong, Singapore, both accelerated to double digit sequential bright yet their contribution to new paying clients dwindle to around one third amid strong triple digit new paying client growth in other markets.
Daniel Yuan: We continue to improve the product experience, optimize the opening process, and carry out targeted market promotion activities. Sponsored ADR Class A
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Daniel Yuan: In Japan, our continued focus on refining the product experience and streamlining the account opening process, coupled with targeted marketing initiatives, led to robust growth in new pain clients and average client athletes. In addition, our Mumu app continues to garner user interest in Japan, with cumulative downloads reaching 1 million in May.
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Speaker Change: Japan are continuing to focus on refining products variance and streamlining the account opening process, coupled with targeted marketing initiatives led to robust growth in new paying clients and average client assets. In addition, our move out continues to garner user interest in Japan with cumulative downloads, reaching $1 billion in may.
Daniel Yuan: Sponsored ADR Class A MUMU has become the most downloaded financial app in China.,,... We will continue to grow to maintain our leading position and expand our market share.
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Daniel Yuan: In Malaysia, our industry-leading trading experience, rich market information and data, interactive social community, and superior brand equity led to an above-expectation growth. Client engagement and trading velocity also surprised us on the upside. Within six weeks of our brokerage business launch in Malaysia, we attracted over 100,000 registered clients and became the most downloaded financial app. Though client acquisitions accelerated into the second quarter, we still expect meaningful contribution from Malaysia for the rest of the year and are committed to defending and extending our market leadership.
Speaker Change: In Malaysia, our industry, leading trading experience rich market information and data interactive social community and superior brand equity led to an above expectation growth client engagement and trading velocity also surprised us on the upside within six weeks of our brokerage business launch in Malaysia, we attract.
With over 100000 registered clients and became the most downloaded financial apps.
Speaker Change: So client acquisition decelerated into the second quarter, we still expect meaningful contribution from Malaysia for the rest of the year and are committed to defending and extending our market leadership.
Daniel Yuan: Sponsored ADR Class A In March, we launched the Japanese stock trading feature in Japan and will open this function to Hong Kong and Singapore in April. We are also planning to launch 5G transactions in Japan in the next few quarters. Nisha, Chuxi Accounts,,. To further expand our product category, we will also launch encrypted currency trading services in Hong Kong and Singapore, and we expect that the currencyization rate of this trading category will be much higher than that of stock trading.
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Daniel Yuan: In Australia, we recently launched Meigu Shuishuigu, Meigu Qiquan, and Meigu Dingtou. In Canada, we launched two types of registered accounts, retirement savings accounts and tax-free savings accounts and Meigu Qiquan trading function and plan to launch the Hong Kong stock trading function in the future.
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Daniel Yuan: We have a rich pipeline of new products and features in all markets. In late March, we launched Japan equities trading in Japan and subsequently in Hong Kong and Singapore in April. We also intend to launch fractional shares trading, NISA savings accounts, margin trading, and mutual funds in Japan in the coming quarters. We'll also start offering crypto trading in Hong Kong and Singapore, and we expect much higher take rates on equities trading.
Speaker Change: We have a rich pipeline of new products and features in all markets in late March we launched Japan equities trading in Japan, and subsequently in Hong Kong and Singapore in April. We also intend to launch fractional shares trading needs a savings account margin trading and mutual funds in Japan in the coming quarters.
Speaker Change: We'll also start offering crypto trading in Hong Kong in Singapore, and we expect much higher take rates and equities trading in.
Daniel Yuan: In Australia, we recently launched fractional shares, options, and recurring investments for U.S. stock trading. In Canada, we introduced a self-directed registered retirement savings plan, a tax-free savings account, U.S. options trading, and will soon roll out Hong Kong stock trading.
Speaker Change: In Australia, we recently allowance fractional share options and recurrent investments for U S stock trading in Canada, we introduce self directed registered retirement savings plan tax free savings account U S options trading and will soon rollout Hong Kong stock trading.
Daniel Yuan: Clients' total assets increased by 7% compared to 11%, reaching 518 billion HKD. The entry-level capital of each market has maintained a strong trend, which has offset the negative impact of the decline of some tech stocks on the market value of Hong Kong stocks. In Singapore, as customers continue to enter and exit the stock market and cash management products, their total assets and neighbors' assets have increased by 25% and 15% respectively.
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Daniel Yuan: Total client assets increased by 11% year-over-year and 7% quarter-over-quarter to HK$518 billion. We continue to experience strong asset inflow across all markets, which more than offset the drag on clients' Hong Kong stock holdings from the market depreciation of several technology names. In Singapore, total client assets and average client assets recorded 25% and 15% sequential growth, respectively, driven by robust net asset inflow into equities and cash management
Total client assets increased by 11% year over year, and 7% quarter over quarter to 518 billion Hong Kong dollars we.
Speaker Change: Two experienced strong outside inflow across all markets, which more than offset the drag on clients' Hong Kong stock holdings from the market depreciation of several technology names.
Speaker Change: And Singapore total client assets in average client assets record at 25% and 15% sequential growth respectively.
Speaker Change: And by robust net outside inflow into equities and cash management products. So.
Daniel Yuan: The total transaction volume has increased by 40% to 1.3 trillion HKD Hong Kong stocks traded at an increase of 18% to HKD280 billion Customers' enthusiasm for technology stocks, high stocks and low stocks, as well as ETFs has increased significantly On the other hand, the trading activity of AI-related and encrypted currency-related stocks has also increased significantly, Promote the 48% increase in the group ratio of U.S. stocks trading to 10,000 trillion Hong Kong dollars This quarter, the balance of the two-year balance has increased by 14% to HKD381, reaching a new high in history.
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Daniel Yuan: Total trading volume rebounded substantially by 40% in the quarter to HK$1.3 trillion. In Hong Kong, trading volume grew by 18% significantly to HK$280 billion. Clients showed heightened interest in technology and high dividend names, as well as leveraged and inversed ETFs. High turnover of crypto and AI-themed stocks helped U.S. stock trading volume jump by 48% sequentially to HK$1 trillion. Margin financing and securities lending balances increased by 14% sequentially to a record high of HK$38 billion.
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Speaker Change: Turnover, if crypto and AI feedstocks helped U S stock trading volume jumped by 48% sequentially to one trillion Hong Kong dollars.
Speaker Change: Margin financing and securities lending balance increased by 14% sequentially to a record high of 38 billion Hong Kong dollars.
Daniel Yuan: Sponsored ADR Class A The wealth management asset scale has maintained a strong growth momentum 356% increase in comparison 37% increase in comparison In order to meet the needs of investors who are in pursuit of high-stakes products, we have launched a fund-based combination of high-payment software configuration strategies.
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Daniel Yuan: Total client assets in Wealth Management were HK$64 billion, up 73% year-over-year and 11% quarter-over-quarter. In the first quarter, bond holdings increased by 21% sequentially thanks to a robust inflow of U.S. Treasury bills. In Singapore, the wealth management asset balance grew by 356% year-over-year and 37% quarter-over-quarter as money market funds continue to gain traction. To cater to investor demand for high dividend yield, we launched a fund portfolio with a high dividend stable allocation strategy.
Speaker Change: Total client assets in wealth management were 64 billion, Hong Kong dollars up 73% year over year, and 11% quarter over quarter and the first quarter Bond holdings increased by 21% sequentially. Thanks to robust inflow and U S Treasury bills and.
Speaker Change: In Singapore wealth management outside balance grew by 356% year over year, and 37% quarter over quarter as money market funds continued to gain traction.
Speaker Change: To cater to investor demand for high dividend yield, we launched a fund portfolio with high dividend stable allocation strategy.
Daniel Yuan: Sponsored ADR Class A
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Daniel Yuan: At quarter end, we have 430 IPO distribution and IR clients, up 22% year-over-year. Additionally, over 1,200 companies have set up enterprise accounts in our social community to interact with retail investors.
Speaker Change: As of quarter end, we have 430, IPO distribution and IR clients up 22% year over year over 200 companies have set up enterprise accounts, and our social community to interact with retail investors.
Daniel Yuan: Next, let's welcome our Chief Financial Officer to introduce our financial statements.
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Daniel Yuan: Next, I'd like to invite our CFO, Arthur, to discuss our financial performance.
Speaker Change: Next I'd like to invite our CFO Arthur to discuss our financial performance.
Yu Chen: Thank you, Li Wan and Daniel. Please allow me to walk you through our financial performance in the first quarter. All the numbers are in HKD unless otherwise noted. Total revenue was $2.6 billion, up 4% from $2.5 billion in the first quarter of 2023. Brokerage commission and handling charge income was $1.1 billion, up 20% in Q3, and largely flat year-over-year. With client trading interest piling on AI and crypto-themed stocks with high stock prices, the blender commission rate decreased from 8.8 basis points to 8.1 basis points due to our per share pricing model in the US.
Daniel: Daniel Please allow me to walk you through our financial performance in the first quarter. All the numbers are in Hong Kong dollars unless otherwise noted.
Daniel: Total revenue was $2 6 billion up 4% from $2 5 billion in the fourth quarter of 2023 brokerage Commission and handling charge income was $1 1 billion of 20% Q over Q and largely flat year over year.
Daniel: With client trading interest tightening on AI as a crypto seems stops with high stock price.
Daniel: The commission rate decreased from eight eight basis points to eight one basis point due to our per share pricing model in the U S.
Yu Chen: As a result, brokerage income grows at a slower rate than trading volume both Q2Q and EOE. Interest income was $1.4 billion, a 5% year-over-year increase and a 1% increase over QQQ. The year-over-year increase was mainly driven by higher margin financing income due to an increase in daily average margin balance and higher interest income from bank deposits. The Q-over-Q increase was mostly driven by high interest income from bank deposits due to an increase in daily average idle cash balance.
Daniel: As a result brokerage income grew at a slower rate than trading volume <unk> and the year over year.
Daniel: Interest income was $1 4, billion% to 5% year over year, and 1% Q over Q the year over year increase was mainly driven by higher margin financing income due to an increase in daily average module balance and higher interest income from bank deposits.
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Yu Chen: Other income was $156 million, 24% year-over-year and 14% Q-over-Q. The year-over-year increase was primarily attributable to higher fund distribution income, and the Q-over-Q increase was mainly driven by higher currency exchange income. Our total cost was $417 million, an increase of 62% from $291 million in the first quarter of 2023. Brokerage commission and handling charge expenses were $16 million, down 17% year-over-year and up 2% QQ. Brokerage expenses didn't move in tandem with brokerage income year-over-year, mainly due to cost savings from our US self-clearing business.
Daniel: Other income was $156 million of 24% year over year, and 14% Q over Q. The year over increase was primarily attributable to higher distribution income and the Q over Q increase was mainly driven by higher currency exchange income.
Daniel: Our total costs were $417 million, an increase of 62% from 291 million in the first quarter of 2023.
Daniel: Brokerage commission and handling charge expenses was $60 million down 17% year over year and up 2% Q over Q.
Daniel: Brokerage expenses didn't move in tandem with brokerage income year over year, mainly due to cost savings from our U S. Self clearing business the expenses grow at a narrow margin the income sequentially due to a nonrecurring costs associated with self clearing migration of Singapore stocks during the fourth quarter of 2023.
Yu Chen: Expenses grew at a narrow margin that income sequentially due to a non-recurring cost associated with the self-clearing migration of Singapore stocks during the fourth quarter of 2023. Interest expenses were $313 million, up 139% year-over-year and 16% Q-over-Q. The year-over-year increase was driven by higher interest expenses associated with our security lending and lending business. The Q-over-Q increase was mostly due to similar reasons, partially offset by lower margin financing interest expenses. Processing and servicing costs were $97 million, 11% year-over-year, and a down 6% year-over-year. The year-over-year increase was largely due to higher crowded service and data transmission fees for UMAP.
Daniel: Interest expenses were 313 billion up a 139% year over year in the 16% Q over Q the year over year increase was driven by higher interest expenses associated with our securities borrowing in the lending business. The <unk> increase was mostly due to similar reasons partially.
Daniel: By lower margin financing interest expenses.
Processing and servicing costs were 19, 7 billion up 11% year over year in the down 6% Q over Q the year over year increase was largely due to higher product service and the data transmission fees for new markets <unk> decline was mainly driven by lower market information and the data fees as well as lower.
Yu Chen: The Q2 decline was mainly driven by lower market information and data fees, as well as lower product services. As a result, total gross profit was $2.1 billion and decreased 4% from $2.2 billion in the first quarter of 2023. Gross margin was 81.9% as compared to 88.4% in the year-ago quarter. Operating expenses went up 16% year-over-year and 2% Q-over-Q to $930 million. R&D expenses were $336 million, down 5% year-over-year and 7% in Q2.
Daniel: Probably the service fees.
Daniel: As a result total gross profit was $2 1 billion a decrease of 4% from $2 2 billion in the first quarter of 2023 gross margin was 81, 9% as compared to 88, 4% in the year ago quarter.
Daniel: Operating expenses was up 16% year over year in the 2% Q over Q to $913 million.
Daniel: R&D expenses was $336 million down 5% year over year in the 7% Q over Q, but year over year in the <unk> decrease was largely due to strict cost control.
Yu Chen: The year-over-year and the Q2 decrease was largely due to strict cost control. Selling and marketing expenses were $293 million, up 107% year-over-year, and 6% Q-over-Q. The increase was driven by our triple-digit year-over-year and Q-over-Q growth in net new paying clients, partially offset by lower client acquisition costs. G&A expenses were $301 million, down 2% year-over-year and 19% Q-over-Q. The year-over-year decrease was mainly due to lower professional service fees, and the Q-over-Q decrease was due to stricter cost control.
Daniel: Selling and marketing expenses were $293 million up a 107% year over year, and a 6% Q O Q. The increase was driven by our triple digit year over year <unk> growth in net new paying clients, partially offset by lower client acquisition cost.
Daniel: G&A expenses were $301 million down 2% year over year in the Sip and.
Daniel: In the 19% Q over Q the year over year decrease was mainly due to lower professional service fees and the <unk> decrease was due to strict cost control.
Yu Chen: As a result, income from operations declined 15% year-over-year and increased by 17% QQ to $1.2 billion. Operating margin declined to $6.8 billion, declined to 46% from 56.2% in the first quarter of 2023, mostly due to higher marketing expenses. Our net income decreased by 13% year-over-year and increased by 18% QQ to $1 billion. Net income margin declined to 39.9% in the first quarter as compared to 47.
As a result income from operations declined 15% year over year and increased by 17% over Q2, $1 2 billion operating margin declined to six to eight.
Daniel: Declined to 46% positive tasty.
2% in the first quarter of 2073, mostly due to higher marketing expenses.
Daniel: Our net income decreased by 13% year over year and increased by 18% over Q2 1 billion net income margin declined to 39, 9% in the first quarter as compared to 47.7% in the same quarter last year, our effective tax rate for the quarter.
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Yu Chen: Our effective tax rate for the quarter was 15.2%. That concludes our prepared remarks. We'd now like to open the call to questions. Operator, please go ahead. Thank you. We will now begin the question and answer session.
Daniel: 2%.
That concludes our prepared remarks, we'd now like to open the call to questions. Operator. Please go ahead.
Speaker Change: Thank you.
Speaker Change: We'll now begin the question and answer session.
Operator: To ask a question, please press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Once again, it's dial 1-1 for questions. Our first question comes from the line of Chiyao Huang from Morgan Stanley. Please ask your question, Chiyao.
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Speaker Change: Yelp Wang from Morgan Stanley. Please ask your question.
Chiyao Huang: Thank you, Guan Li Chen, for giving me the first chance to ask a question. First of all, congratulations to the company for achieving very eye-catching acquisition and operation results. I have two questions to ask you.
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Chiyao Huang: First, regarding Japan, can Guan Li Chen give more color to the number and per capita assets of asset users in the current progress? And if we look at the conversion rate from user to paying client, compared with other overseas markets in Japan, what is the current trend? Is there any difference in the conversion rate?
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Chiyao Huang: This is the first question. The second question is about the rebound of the market since March and April. We believe that the exchange rate of customers in Hong Kong and the income may also bring a more obvious improvement. After all, under the profit-making effect, we think these benefits may be more obvious.
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Chiyao Huang: So I would like to ask Guan Li Chen to share the rebound of China's related assets in the second quarter. What are the new helps in our specific business, including the exchange rate of customers and the income? Thank you. I will translate it briefly.
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Chiyao Huang: The first question is regarding the progress we are making in Japan in terms of the number of paying clients, the per client AUM, and also want to have more information on the conversion rate from the app user to a paying client. Is there any difference we are seeing in Japan right now compared to other international markets at a similar stage? So I'm wondering if management could be more clear on that. And the second question is regarding the into 2Q, we're seeing a pretty strong rebound in the China-related assets in Hong Kong and in the U.S. as well. So I wonder what help we're seeing right now in terms of client trading activity and found inflows in the second quarter so far. Thank you.
Speaker Change: I wouldn't think so.
I've got two questions first question is regarding the progress we are making in Japan in terms of the number of paying clients.
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Speaker Change: View on the conversion rate from the App user to a paying clients is there any difference you are seeing in Japan, right now compared to other international markets that are similar stage. So I'm wondering if management could give more color on that second question is regarding the.
Speaker Change: Into <unk>, we're seeing pretty strong rebound in China related assets in Hong Kong.
Speaker Change: In the U S as well so I wonder what's the help we are seeing right now in terms of client trading activity and some inflows in the second quarter. So far thank you.
Li Xu: Thank you, Chiyao. I'll let my colleague, Daniel, answer your first question, and I will address your second question sequentially.
Chi: Thank you Chi I'll, let my colleagues Daniel to answer your first question and I will address your second question sequentially. Thank you.
Daniel Yuan: Regarding the first question about Japan, we can see that the speed of customer acquisition in Japan has increased significantly compared to the first quarter. Compared to the first quarter, the speed has increased significantly compared to the fourth quarter, and compared to the first quarter, the speed has increased significantly compared to the second quarter. Moreover, the proportion of customers who have invested in our company is still very high. As for the average customer asset, we think that it is still at an early stage.
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Daniel Yuan: However, we can clearly see that customers from different companies continue to invest in our company. Regarding the conversion rate, from users to the conversion rate of real-estate clients, in Japan, we feel that with the gold process experience, some improvements in all aspects, and then with some of our products, we see that the conversion rate is significantly increasing in Q1Q. But compared with other overseas markets, whether it is the current data or the initial data of other market industries, we still see a very big gap.
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Daniel Yuan: We think this is more likely to be related to some of the experiences with open accounts. Of course, another very big factor is the completeness of the products. Just now, Li Xu also mentioned that in the next few quarters, we have a very rich product launch plan.
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Daniel Yuan: In Japan, we are seeing very meaningful growth in terms of new paying clients. We saw strong sequential growth in the first quarter, and second quarter to date, we observed similar strong Q1Q momentum. In terms of client AUM, I think we are still in the early innings of attracting client assets, but we have seen across client cohorts that they continue to put assets onto our platform. In terms of conversion from users to paying clients, that conversion ratio has improved quarter over quarter, thanks to a better account opening process and with more financial products rolled out on our platform.
Speaker Change: Let me translate for myself, so for in Japan, where it's being very meaningful growth in terms of new paying clients we.
Speaker Change: We saw strong sequential growth in the first quarter and second quarter quarter to date, we observed similar strong Q1, Q momentum and in terms of client.
Speaker Change: We are still in the early innings of attracting client assets, but we have seen across client cohorts that they continue to put assets onto our platform and in terms of conversion from users to paying clients.
That conversion ratio has improved.
Speaker Change: During the quarter, thanks to a better account opening process.
Speaker Change: With more financial products rollout on our platform, but there are still a significant gap in comparison to other overseas markets, whether its current percentages or when they were first.
Speaker Change: When we first launch into that market and I think that's more.
Speaker Change: The reason is because of the power opening friction and the product and the lack of.
Daniel Yuan: But there is still a significant gap in comparison to other overseas markets, whether it's current percentages or when we first launched into that market. I think it's more of a reason because of the account opening friction and the lack of comprehensive financial products. As Li mentioned in his opening remarks, we have a very rich product pipeline coming up in Japan in the coming quarters. Thank you. Okay, let me ask you the second question.
leaf: Comprehensive financial products and as leaf mentioned in his opening remarks, we have a very rich product pipeline coming up in Japan in the coming quarters.
Li Xu: OK, let me answer the second question. From the performance of the second quarter, as you said, we see a very strong rebound in the Hong Kong market. This will see a continuous improvement in the acquisition of all our customers in Hong Kong, including import and transaction volume. From the data of the first quarter, as you can see, the whole transaction volume of our first quarter accounted for more than 75% of the total transaction volume of US stocks.
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Li Xu: In the second quarter, due to the rebound of Hong Kong stocks, the transaction volume of Hong Kong stocks increased significantly. I believe that the proportion of transaction volume in different markets will be more even in the second quarter. Secondly, based on the data of the first quarter, we actually recorded a very strong entry level. The overall entry level is more than HK$3.5 billion.
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Li Xu: This is due to the strong performance of our Hong Kong market, Singapore market, and some newly entered markets. From the second quarter to the current situation, this good performance has also achieved very strong continuation. So from the entry level, and the perspective of our customers' total assets, we still see very good growth. From the perspective of acquisition, in the first quarter, we already acquired 1.7 million assets.
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Li Xu: Of course, some of the growth of our customers is due to the very good performance of our newly entered markets in Malaysia. In the current situation of the second quarter, the overall situation will be slower than the first quarter because the situation in the Malaysian market will become more normal. But the absolute number of customers still maintains a very strong level.
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Speaker Change #102: Let me translate for myself number one is we definitely we see a very strong momentum recovery in Hong Kong markets, which signet will significantly help our clients asset inflows in Hong Kong.
Li Xu: Number one is we definitely see a very strong momentum recovery in Hong Kong's markets, which significantly helps our clients' asset inflows in Hong Kong and overall, in terms of trading volume, trading velocity, etc. As Lee mentioned in the opening remarks, in terms of the trading volume breakdown, our stock trading accounts for roughly over 75% of our total trading volume, and we do expect this ratio will become more healthy given more contributions from Hong Kong stocks in the second quarter.
Speaker Change #102: And the overall in terms of trading volume trading velocity et cetera.
Speaker Change #103: <unk> mentioned in the opening remarks in the first quarter in terms of the trading volume breakdown. The U S stock trading comscore roughly over 75% of our total trading volume and we do expect this ratio will become more healthy.
Speaker Change #103: The more contributions in Hong Kong stop in the second quarters and number two is in the first quarter, we record a very strong net asset inflows, which roughly over 35 billion Hong Kong dollars. Thanks to a very strong inflow from our existing markets in Hong Kong, Singapore et cetera also.
Li Xu: And number two, in the first quarter, we recorded a very strong net asset inflow, which is roughly over HK$35 billion, thanks to a very strong inflow from our existing markets in Hong Kong and Singapore, etc. Also, incremental contributions from new markets, such as Malaysia and Japan, etc. And we do believe such momentum remains in the second quarter to date. This will significantly help in terms of client assets and trading volume, etc.
Speaker Change #103: Incremental contributions from new markets, such in Malaysia, and Japan et cetera, and we do bill.
Believe such momentum.
Speaker Change #103: <unk> remains in the second quarter to date.
Speaker Change #103: This will significantly help our insurance of the client assets and the trading trading volume et cetera, and certainly.
Li Xu: And thirdly, despite having already achieved over 170 fund accounts in the first quarter, partially due to some special reasons in Malaysia due to our grand opening in the first quarter, but we do think the overall momentum on absolute terms remains very strong, although we expect there can be some Q-over-Q decrease due to a very high base in the first quarter. Thank you. Thank you. As a reminder, to ask a question, please press star 1.
Speaker Change #103: Despite.
Speaker Change #103: <unk> already achieved over 170, <unk> fund accounts in the fourth quarter, partially due to some special reasons in Malaysia due to our Grand opening in the fourth quarter, but we do think the overall momentum our absolute terms remain very strong despite the spa.
Speaker Change #103: We expect there can be some Q over Q.
Speaker Change #104: <unk> decreased due to a very high base in the fourth quarter. Thank you.
Speaker Change #105: Got you.
Speaker Change #106: Thank you.
Operator: As a reminder, to ask a question, please press star 11 on your telephone keypad. Our next question comes from the line of Catherine Lei from JP Morgan. Please ask your question, Catherine.
Speaker Change #107: As a reminder to ask a question. Please press star one on your telephone keypad.
Speaker Change #108: Our next.
Speaker Change #109: <unk> comes from the line of Catherine Lee from Jpmorgan. Please ask your question Katherine.
Catherine Lei: Hi, can you hear me clearly? Hello, everyone. I'm Feng Xixi from Morgana.
Katherine: Hi can you hear me clearly.
Speaker Change #109: Sure.
Speaker Change #111: I'd go with Watson.
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Catherine Lei: I mainly have two questions. First, can you tell us in detail about the management of Malaysia? What is the image of Malaysian customers? What is their main trading pattern? For example, what is their exchange rate? Because of our previous exchanges, these customers are quite active in this area. Do you think this is because some events are more active? Or is it because the customers in this area are particularly active? How sustainable is this?
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Speaker Change #114: Yeah, Thank you and ladies and gentlemen, thank you Jonathan.
Speaker Change #113: Yeah.
Speaker Change #115: The coupon Jonathan's comments.
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Speaker Change #117: Yeah, Hi, guys just somebody out there you get some time ago.
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Speaker Change #118: You may now.
Speaker Change #119: Again, driven user centered we got wire houses will take its really the cohort.
Speaker Change #118: Koby.
Speaker Change #120: Consistent with that guidance.
Catherine Lei: Can you tell us about some of the main markets in this area? Thank you. This is the first question. The second question I want to ask is about the commission rate. Because the management team just mentioned the commission rate, there was a significant decline in the currency exchange rate. Partly because of the management team's explanation. It's because of the cost structure in the U.S. But in the second quarter, with China ADR stock, which is not so big, there was a rebound in the stock price.
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Speaker Change #122: Thank you John.
Speaker Change #121: Okay.
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Speaker Change #125: Hey, guys all basic.
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Catherine Lei: There were also some factors, such as NVIDIA's soft bid. Can we predict that in the second quarter, when the currency exchange rate was down, there was a rebound in the stock price? How can we predict this trend?
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Catherine Lei: Thank you.
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Speaker Change #128: We will appreciate if management can give us some color on.
Speaker Change #129: The Malaysia market like I had that clients are very active in trading is that one of our event driven or is that.
Speaker Change #130: With spring trends the second questions will be more on the commission rates do you think that we will see some sequential improvement in the sequential rate how should we farm out expectation. Thank you.
Li Xu: Thank you, Catherine. Let me answer the second question first. Then I will answer the first question about Unieconomics. Then I will ask my colleague Robin to add a picture of Malaysian customers. First, as we have explained before.
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Li Xu: Indeed, in the first quarter, the overall US stock price of our customer transactions was relatively high. Therefore, like-for-like, we will have a decline in the commission rate. I expect there will be a significant improvement in the second quarter. On the one hand, it benefits the overall market. As Catherine just mentioned, for example, there are some high-priced stocks, such as Navida.
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Li Xu: These will have a share distribution from June 1. This will alleviate the disadvantage of our payment model. From the current situation in the second quarter, the overall interest rate in the second quarter is relatively stable compared to the first quarter. There is no further decline. Let me translate for myself the second question first.
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Li Xu: I think the blended commercial rate decrease was mainly due to our pricing model in the U.S. stock market, as we mentioned before. And quarter to date, we have seen the ratio has already become more stable, partially due to there being some high-value stocks, such as Nevada, etc., in the U.S. will conduct a stock split. So this will alleviate the pricing pressure in the U.S.
Speaker Change #141: The blended commission rate decrease was.
Speaker Change #141: It was mainly due to our pricing model in the U S.
Speaker Change #141: Stock markets, we mentioned that before and the quarter to date, we have seen the ratio has already become more stable partially due to there were some high value stock such a Nevada et cetera in the U S where conductor stock split. So this will alleviate the pricing pressure.
In the U S.
Li Xu: The first question is about the exchange rate of Malaysian customers' transactions. At the moment, it is still relatively short for us to enter this market. But from the data we have seen so far, whether it is from the customer's entry fee, the customer's transaction volume, or the customer's exchange rate, the overall situation of Malaysian customers' performance is much higher than the overall average level of our overseas market. So, basically, from the current situation for a few months, we don't feel that this is a temporary event.
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Joel: Dropping into will finally, Joel telecom in terms of unit economics in Malaysia, So far on a cohort basis, we have witnessed a very healthy organic growth in terms of Casa inflow.
Li Xu: Of course, we may need more time to do some corresponding observations. So, I will ask Robin to add more details about the situation of the customer image after I translate it. In terms of unit economics in Malaysia, so far, on a cohort basis, we have witnessed a very healthy organic growth in terms of cash flow, then client's trading velocity, and also the trading volume, etc. It seems that all this growth in Malaysia is well above the average situation in our overall overseas markets.
Joel: And then clients trading velocity and also the trading volume et cetera. It seems that all of this matrix in Valencia is well above the average situations of our of all our overall overseas markets of course. It is maybe still too early to say given that we just entered into.
Li Xu: Of course, it is maybe still too early to say, given that we just entered Malaysia a couple of months ago. We will still keep closely monitoring. But having said that, we think the user behavior demonstrated so far is not just because of some one-off events.
Malaysia, a couple months ago, we will still keep.
Joel: Closely monitoring.
Joel: But having said that we think.
Joel: The user behavior demonstrates so far is not just because of some one off events. Thank you.
Li Xu: Okay, thank you, Peter. Let me answer a question. Hello, thank you for the question. Let me answer the first question.
Joel: Okay.
Joel: Okay.
Joel: Eagle.
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Li Xu: At the end of February this year, we officially launched our securities business in Malaysia for the last week, and the customers were very excited. In one quarter, we contributed about one-third of our competitors' assets to the group. We spent 49 days to make Malaysia the first in the history of accumulated downloads. We are now number one in Malaysia. In such a short period of time, I think it is mainly due to the following aspects. First of all, we have become the number one technology broker in Singapore, and we have a very good reputation. Singapore's brand influence, Sponsored ADR Class A
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Li Xu: So we officially launched our brokerage business in Malaysia by the end of February, and we've experienced very rapid growth. So in the first quarter, Malaysia contributed about one-third of our net new paying clients. And within 49 days of our official brokerage business launch, we achieved number one in total cumulative downloads in Malaysia.
Speaker Change #178: So we officially launched our brokerage business in Malaysia.
Speaker Change #178: End of February and we've experienced very rapid growth. So in the first quarter, Malaysia contributed about one third of our net new paying clients and within 49 days of official brokerage barefoot Crouch.
Speaker Change #178: Achieved number one in total cumulative download in Malaysia, and I think the reason why we can grow so quickly in Malaysia can be attributed to several factors first of all we were already the biggest.
Li Xu: And I think the reason why we can grow so quickly in Malaysia can be attributed to several factors. First of all, we were already the biggest online broker in Singapore when we entered Malaysia, and that brought us a lot of brand recognition. And secondly, we simply offer the best product in Malaysia, a one-stop platform where you can invest in Malaysian equities and U.S. equities, and we have free market data and information, which are all industry-leading.
Speaker Change #178: Bank broker in Singapore, we entered in Malaysia, and Dr. Brian There's a lot of brand recognition and secondly, we simply just operate best product in Malaysia, One stop platform, where you can invest 10 laser equities U S equities and we have a free market data and information, which are all industry, leading and last one I'll leave we have also accumulative.
Li Xu: And last but not least, we had accumulated a large number of users before our official brokerage business launch, and we were able to convert a very meaningful chunk of those users. I think the first quarter growth was above our expectations, but going into the second quarter, we believe the contribution of Malaysia will come down sequentially. I think that's because there is still room for improvement in terms of the level of automation in client account opening, asset inflow and outflow, in operations, et cetera.
Emulated a large number of users.
Speaker Change #178: For our official brokerage business launch we were able to convert.
Very meaningful chunk of those users.
Speaker Change #178: In the first quarter growth was above our expectations.
Speaker Change #178: Going into the second quarter, we believe the contribution of Malaysia will come down sequentially.
Speaker Change #178: That's because there is still room for improvement in terms that the level of automation and client account opening outlet inflow and outflow in the operations to et cetera. So in order to ensure that our clients and have a very smooth experience and to increase our operational efficiency I think we dynamically adjust our client.
Li Xu: So in order to ensure that our clients can have a very smooth experience and to increase our operational efficiency, I think we dynamically adjust our client acquisition pace to better inform our growth in Malaysia. And in terms of our client profiles, most of our clients in Malaysia are male and have higher income, and in terms of ethnicity, a lot of them are from the Chinese population. I think that partly explains the high trading turnover and a relatively higher average asset than we expected, which will probably lead to a favorable payback period in Malaysia. Right, thank you. Once again, to ask a question, please...
Speaker Change #179: <unk> paid.
Speaker Change #179: And so as to better inform our outgrowth in Malaysia.
And in terms of our client profile most of our clients and Malaysia are male tend to have higher income and in terms of ethnicity. A lot of them are the Chinese population I think that partly explains the high trading turnover and relatively higher.
Speaker Change #179: Average asset than we expected, which will probably lead to favorable payback period in Malaysia.
Speaker Change #179: Okay.
Operator: Right, thank you. Once again, to ask a question, please press star 11 on your telephone. All right, I'm showing no further questions, and I'll turn the conference back to Mr. Daniel Yuan for closing comments.
Speaker Change #180: Great. Thank you once again to ask a question. Please press star one one on your telephone.
Speaker Change #181: I'm showing no further questions I'll now turn the conference back to Mr. Daniel.
Daniel Yuan: <unk> for closing comments.
Daniel Yuan: That concludes our call today. On behalf of the Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you, and goodbye.
Speaker Change #183: That concludes our call today on behalf of <unk> management team I would like to thank you for joining US today. If you have any further questions. Please don't hesitate to contact me or any of our Investor Relations representative Thank you and goodbye.
Operator: Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change #184: Thank you that concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change #184: Okay.
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Speaker Change #184: [music].