Futu Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 28, 2026

Key Takeaways

  • Positive Sentiment: Futu added 225,000 net new funded accounts in Q1, bringing total funded accounts to 3.59 million, up 34% year over year. Management said Hong Kong, Malaysia, and Singapore remained important growth drivers, while overseas Moomoo accounts surpassed 2 million.
  • Positive Sentiment: Trading activity hit a record, with total volume reaching HKD 4.15 trillion, up 29% year over year. U.S. volume stayed strong at HKD 3 trillion, while Hong Kong volume rose 22% sequentially as investors bought into volatility.
  • Neutral Sentiment: Revenue rose 25% year over year to HKD 5.9 billion, but net income fell sharply because the company booked an approximately RMB 1.85 billion administrative penalty reprieve as an adjusted subsequent event. Excluding that item, management said net income would have increased year over year.
  • Positive Sentiment: Management highlighted continued expansion into new products and markets, including U.S. prediction markets, where it expects to launch event-contract trading soon, and the PantherTrade crypto exchange in Hong Kong, which has begun full operations after VATP approval.
  • Neutral Sentiment: Futu said wealth management assets reached HKD 178.4 billion, up 28% year over year, with more client allocation shifting toward equity funds and structured products. It also said it remains confident in long-term growth in mature markets like Hong Kong and Singapore, and reiterated that the recent regulatory update should not materially affect full-year guidance.
AI Generated. May Contain Errors.
Earnings Conference Call
Futu Q1 2026
00:00 / 00:00

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Operator

Hello, ladies and gentlemen. Welcome to Futu Holdings' first quarter 2026 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. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Alan Cui, Investor Relations Manager at Futu. Please go ahead, sir.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Thanks, operator. Thank you for joining us today to discuss our first quarter 2026 earnings results. Joining on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Xu, Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's beliefs regarding future events, which by their nature are not certain and are outside of the company's control. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors would cause actual results to differ materially from those contained in 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 Leaf. Leaf will make his comments in Chinese, and I will translate.

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Thank you all for joining our earnings call today. In the first quarter, we added 225,000 net new funding accounts, bringing our total funding accounts to 3.59 million, up 34% year-over-year and 7% quarter-over-quarter. Although subdued Hong Kong equity markets weighed on client acquisition, Hong Kong still contributed the second-largest new account addition among all regions. We remain confident about sustained client growth in Hong Kong. Looking ahead, we will focus more on the growth of client assets and lifetime value, leveraging our strength in product innovation, brand trust, and one-stop platform to further unlock the commercial potential of the Hong Kong market. Singapore delivered double-digit sequential growth in net new funding accounts. Over the past three years, average client assets in Singapore grew at a CAGR of more than 50%.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Given the wealth profile of local residents, we continue to see significant room for further asset growth in Singapore. Malaysia led all markets in client additions for another quarter, thanks to our effective marketing initiatives around U.S. equities, as well as Moomoo's strong IPO product capability, which allowed us to capitalize on the active Malaysian IPO window for accelerated client growth. Meanwhile, profitability in Malaysia continued to improve, and we expect the market to achieve breakeven within the next six to 12 months. In Japan, our superior U.S. equity trading capability continued to drive client acquisition. In the first quarter, U.S. stock trading volume in Japan recorded double-digit sequential growth while U.S. options contract volume doubled. This year, we will continue to enhance our Japanese equity trading experience to better meet domestic investment needs and further unlock client acquisition potential.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

In the US, we officially received NFA approval to operate a prediction market brokerage business, and we will soon begin offering event contracts, including sports-related products, to local investors, further strengthening Moomoo's value proposition to active traders.

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Client engagements strengthened on the back of precious metal market volatility and geopolitical tension, leading to the second highest quarterly net asset inflow on record. Market losses in client equity holdings exerted a substantial negative impact. The client asset remained flat quarter-over-quarter, yet up 47% year-over-year. Client asset registered double-digit sequential growth in Japan, Australia, and Canada. The average client asset across these three regions also reached all-time high and is growing, improving client quality. Rising risk appetite drove margin financing and security lending balance up 8% sequentially to HKD 72.9 billion at quarter end.

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Total trading volume reached a record HKD 4.15 trillion, up 29% year-over-year and 4% quarter-over-quarter. U.S. stock trading volume remained broadly stable at HKD 3 trillion. AI continued to be the dominant investment theme, with client interest gradually shifting down the value chain from semiconductor names towards AI infrastructure beneficiaries. Hong Kong stock trading volume rose 22% sequentially to HKD 1 trillion, as heightened market volatility drove stronger bottom fishing activities. Active trading in China technology and newly listed AI-related companies more than compensated for softer momentum in the consumer sector.

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

In March, PantherTrade officially obtained second phase approval for the Hong Kong SFC VATP license and commenced full operations. Since launch, a portion of Futu Securities' crypto trading volume and AUM has migrated to PantherTrade. Looking ahead, we plan to introduce security-backed margin financing for virtual assets in Hong Kong to further enhance capital efficiency across asset classes. At the same time, we will continue to expand the capability of our crypto exchange, including OTC trading, broader token support, and staking services. We are also actively exploring new institutional service use cases with the goal of making PantherTrade a key infrastructure within the Hong Kong Web3 ecosystem.

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Period end wealth management client assets were HKD 178.4 billion, up 28% year-over-year, and broadly stable quarter-over-quarter. In the first quarter, client asset allocation partly rotated from money market funds into equity funds amidst improving risk appetite. In response to evolving client demands, we further expanded our fund selection. In Hong Kong, we became one of the first brokers to offer space economic themed mutual funds, while in Singapore, we rolled out local equity funds under the MAS Equity Market Development Programme. We also launched gold and oil-linked structured notes and onboarded new issuers. Total retail subscribers for structured products doubled sequentially. As of quarter end, we served 625 IPO distribution and IR clients, up 26% year-over-year.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

In the first quarter, 12 IPOs each saw over HKD 100 billion in subscription demands on our platform, while six issuers appointed us as overall coordinators for their Hong Kong listings, underscoring our strong distribution and underwriting capabilities. During the quarter, we also act as joint bookrunners for several prominent Hong Kong IPOs, including those of Zhipu AI, MiniMax, and Biren Technology.

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Next, I'd like to invite our CFO, Arthur, to discuss our financial performance.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

Thank you, Leaf and Alan. 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 HKD 5.9 billion, up 25% from HKD 4.7 billion in the first quarter of 2025. Brokerage commission and handling charge income was HKD 2.6 billion, up 14% year-over-year, and down 5% quarter-over-quarter. Total trading volume grew on both year-over-year and a quarter-over-quarter basis, while blended commission rate declined due to stronger trading activities in higher priced U.S. stocks and options during the quarter. Interest income was HKD 2.7 billion, up 28% year-over-year, and down 13% quarter-over-quarter.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

The year-over-year increase was mainly driven by high interest income from margin financing and bank deposits, while the quarter-over-quarter decrease was primarily attributable to lower interest income from securities borrowing and the lending business, as well as bank deposits. Other income was HKD 564 million, up 80% year-over-year and down 10% quarter-over-quarter. The year-over-year increase was primarily driven by higher currency exchange service income and IPO subscription service charge income. The quarter-over-quarter decrease was mainly due to lower enterprises public relationship service charge income and IPO subscription service charge income. Our total cost was HKD 749 million, flat compared to the first quarter of 2025. Brokerage commission and the handling charge expenses were HKD 164 million, up 16% year-over-year and 16% quarter-over-quarter.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

The year-over-year increase was broadly in line with the growth of our brokerage commission and handling charge income. The quarter-over-quarter increase was mainly due to transaction fees rebate in the prior quarters. Interest expenses were HKD 415 million, down 12% year-over-year and 5% quarter-over-quarter. Both the year-over-year and the quarter-over-quarter decrease was mainly driven by lower interest expenses associated with our security borrowing and lending business. Processing and service costs were HKD 117 million, up 25% year-over-year and 13% quarter-over-quarter. Both year-over-year and the quarter-over-quarter increase was primarily driven by higher product service fees. As a result, total gross profit was HKD 5.1 billion, an increase of 29% from HKD 3.9 billion in the first quarter of 2025. Gross margin was 87.2% as compared to 84% in the first quarter of 2025.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

Operating expenses were HKD 1.6 billion, up 25% year-over-year and flat quarter-over-quarter. R&D expenses were HKD 479 million, up 24% year-over-year and down 5% quarter-over-quarter. The year-over-year increase was primarily driven by higher R&D headcount to support strategic initiatives in the new markets. Selling and the marketing expenses were HKD 557 million, up 21% year-over-year and 10% quarter-over-quarter. Both the year-over-year and the quarter-over-quarter increase was mainly driven by higher customer acquisition costs. G&A expenses was HKD 541 million, up 30% year-over-year and flat quarter-over-quarter. The year-over-year increase was primarily due to increase in G&A personnel. As a result, income from operation was HKD 3.5 billion, up 31% year-over-year and down 15% quarter-over-quarter.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

Operating margin increased to 30.3% from 57.2% in the first quarter of 2025, mostly due to strong top-line growth and operating leverage. On May 22nd, 2026, the company received an administrative penalty reprieve notification letter from the China Securities Regulatory Commission, Shenzhen Bureau, in an aggregate amount of approximately RMB 1.85 billion, which has been fully reflected in our first quarter financial statements as an adjusted subsequent event under U.S. GAAP. This amount does not impact our business fundamentals or financial stability. We remain focused on long-term growth across international markets. As a result, our net income decreased by 61% year-over-year and 75% quarter-over-quarter to HKD 831 million, with net income margin at 14.2%. Prior to giving effect to this adjustment. Our net income would have increased by 36% year-over-year and down 13% quarter-over-quarter to HKD 2.9 billion, with net income margin at 49.9%.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

As of the close of the U.S. market on May 27th, 2026, we have cumulatively repurchased approximately $418 million worth of ADSs, reflecting management's strong confidence in the company's future growth prospects and the commitment to deliver shareholder value. Subject to market conditions, we may continue to execute repurchases from time to time and the $800 million share repurchase program announced in November 2025. That concludes our prepared remarks. We'd now like to open the call to questions. Operator, please go ahead.

Operator

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile our Q&A roster. Our first question is going to come from the line of You Fan with CICC. Your line is open. Please go ahead.

You Fan
You Fan
Analyst at CICC

[Non-English content] Thanks management for taking my call. This is You Fan from CICC. I have two questions here. The first one is about the regulation. Would you please share more on your understanding of the latest regulatory requirements published by CSRC and SFC last Friday? What's the impact on Futu? The second question is about our regional breakdown. Would you please share more data on the regional breakdown of the net new added paying clients, the existing paying clients in Q1, and also the AUM breakdown by regions as of Q1? These are my two questions. Thank you.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

[Non-English content]

Leaf Li
Leaf Li
Chairman and CEO at Futu Holdings

[Non-English content]

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

CSRC and SFC released updated industry-wide regulatory update last Friday. Regarding cross-border securities, futures and fund-related activities involving Mainland Chinese investors. We paid close attention to the updates immediately and responded proactively. This regulatory adjustment applies uniformly across the industry, and the company will continue to actively embrace regulatory requirements and steadily advance subsequent compliance measures in strict accordance with the guidance. As a licensed financial institute, Futu has always placed compliance operation as its top priority. Previously, we had already fully ceased account opening for Mainland Chinese identity holders. While continuously strengthening our account review and anti-fraud mechanism, we maintain zero tolerance towards fraudulent activity. Over the past two years, we have cumulatively rejected tens of thousands of non-compliant account opening applications.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

As of the end of the first quarter, Mainland China funded accounts represent approximately 13% of our Q2 funding accounts, while related client assets accounted for around 17% of total client assets, contributing approximately 20% of total revenue. In addition, the two-year recertification period of Mainland Chinese clients does not require forced account closures, but rather restrictions on deposit and security buying activities while clients are physically located within Mainland China. Over the past several years, Futu's business has also become increasingly diversified. In Hong Kong, despite the intense competitive market environment, we have maintained a market share of over 50% among local residents. Meanwhile, the company's international expansion has entered a phase of full acceleration. In the first quarter, Moomoo, our overseas independent brand, delivered strong year-over-year revenue growth across all overseas markets, with revenue in five countries more than doubling.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Overseas funded accounts surpassed 2 million, while client quality continued to improve steadily, with average AUM per client reaching approximately $18,000, significantly higher than that of other local online investment platforms. Looking ahead, the company expects to expand into more international markets. Regulatory license applications are progressing smoothly. While we are also advancing related preparations in parallel, we believe our global expansion strategy will further enhance the resilience of the group's business structure and broaden its long-term growth potential. Overall, the company's operations in both Hong Kong and overseas markets remain fully normal, and various new business initiatives are progressing in an orderly manner. We do not expect this regulatory update to have any material impact on our full-year guidance of 800,000 net new funded accounts.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Futu will continue to adhere to its compliance first and international expansion strategies, while continuously enhancing its product and service capabilities to drive long-term sustainable growth.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

[Non-English content] Malaysia and Hong Kong together contributed more than half of the net new funded accounts in the first quarter, while among the remaining markets, Singapore contributed the largest ratios. At the end of the first quarter, over 55% of the group funded accounts were under our overseas brand Moomoo, primarily from Singapore, U.S., and also Malaysia. At the end of the first quarter, Futu Securities Hong Kong entity contributed the largest share of the group's total assets. Within Moomoo, total clients assets was primarily contributed by Singapore and the U.S. Thank you.

You Fan
You Fan
Analyst at CICC

[Non-English content] Thank you very much.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Leon Qi with CLSA. Your line is open. Please go ahead.

Leon Qi
Leon Qi
Analyst at CLSA

[Non-English content] Thanks management for taking my questions. This is Leon Qi from CLSA. I will recap my questions in English. I have two questions. My first question is on the regulatory aspect. With the recent regulatory updates as well as the administrative penalty disclosed, we would like to understand your latest cooperations with banks and other funding partners. For example, in our credit lines with the banks, funding costs or credit ratings, are they generally remain stable? Some color around that will be very helpful to us. My second question is on the growth potential in our international markets, especially the mature markets. We do understand that Futu already has a very strong presence in Hong Kong and Singapore. How do you think about the runway ahead for continued growth in these markets? Thanks a lot.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

[Non-English content] For the first question regarding the credit facility and also the credit rating, actually this week, I and my teams had very constructive discussions with our credit rating agency and commercial bank partners around the globe. I'm very happy to share that our credit facilities remain intact. And in the next couple of weeks, we are very likely to get our annual credit rating issued by S&P Global Ratings and I'm very confident there will be a good result. [Non-English content] While Futu has achieved a very extensive user coverage in Hong Kong and Singapore, there remain enormous potentials for further penetrate and grow client assets.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

A recent report issued by BCG states that Hong Kong has overtaken Switzerland to become the world's largest support for the wealth management hub, with Singapore ranking the third. According to the public data by SFC, Hong Kong's wealth management assets exceed HKD 35 trillion by the end of 2024. Data from the MAS also shows the city state's wealth management assets also topped HKD 34 trillion over the same period. By contrast, Futu's group's total assets stand now just over HKD 1 trillion. As two major international financial hub, Hong Kong and Singapore boost the trillions of HKD in resident wealth. With our brand influence continue to grow, our in-depth wealth service in these two markets are still in the early stage. The market upside remains substantial with vast room for development.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

After more than a decade of refinement, we have built a comprehensive product portfolio, outstanding customer service capabilities and expanding global financial service ecosystems. We are fully confident in the future and we will keep optimizing our offering and further deepen our presence in these two mature markets. Thank you.

Leon Qi
Leon Qi
Analyst at CLSA

[Non-English content] Thanks a lot, very helpful.

Operator

Thank you. One moment as we move on to our next question. Our next question comes from the line of Chiyao Huang with MS. Your line is open.

Chiyao Huang
Analyst at MS

[Non-English content] Basically two questions from me. One is on the U.S. prediction market, what is the main opportunity that the company is focusing on and what's the planning here? Is there any synergy with the current our business in the U.S. and how the management see the margin and the term of this business in the U.S.? Second question on the crypto business in Hong Kong, especially regarding the VATP, is there any update on the product and strategies? Also potentially what kind of synergy could we have between Hong Kong crypto business with that in the Singapore and the U.S.? Also wondering how does management think about at what level of a client assets should be in crypto in order for us to see a meaningful monetization opportunities and roughly what time it's going to take?

Chiyao Huang
Analyst at MS

The time we're spending is more on the building our own infrastructure and product offerings or just for the acceptance of the client to grow? Thank you.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

[Non-English content] Thanks for the questions regarding the prediction markets. Moomoo Financial and Futu Clearing officially obtained FCM license in May, allowing us to conduct prediction market brokerage and the clearing business. Alongside the license application process, we have also completed the development of product and system capabilities and expect to launch prediction market trading service to our U.S. retail clients in the near future. Compare with traditional derivatives such as futures, prediction markets products are generally more intuitive, easy for clients to understand and offer more flexible participation mechanisms. This not only helps improve retail participation in financial markets and promote broader financial inclusion, but also has the potential to become the important driver for client acquisition, trading activation, and client conversion on the platforms.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

We also witness in the past couple of months, a lot of major U.S. players such as Kalshi, Polymarket and Robinhood make a huge progress in terms of new client acquisition through this new product offerings. Also for prediction market product linked to the financial events, market makers hedging activities around underlying assets could further enhance liquidity in both spot and the derivative markets, while also strengthening the overall price discovery efficiency across security markets.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

Our expansion into the prediction market business in the U.S. is not only intend to capture the rapid growth opportunity in the local market, but I think more importantly, is to accumulate core know-how in areas such as product design, operational management, and risk control. We believe this experience will help lay the foundations for expanding prediction market business into additional markets in the future. At present, we are also very actively engaging and discussing with regulators in other jurisdictions regarding the scope and the feasibilities of prediction market products. Thank you.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

[Non-English content] Let me quickly translate. In March, as Leaf mentioned in opening remarks, PantherTrade successfully passed the second phase approval of the Hong Kong SFC's VATP license and officially commenced full operation. Going forward, we will focus on advancing the business across three dimensions. Firstly, we will be strengthening the internal synergy and traffic conversion capability. Currently a portion of Futu Securities virtual asset trading volume and AUM has already migrated to PantherTrade. Looking ahead as the Group gradually secures compliant virtual asset licenses in additional regions, we will actively explore deeper collaboration opportunities between our regional cryptocurrency brokerage businesses and PantherTrade with applicable regulatory framework. Second, we will continue to enhance our virtual asset product ability subject to regulatory approval. We plan to progressively introduce core functionalities such as OTC trading, additional token listings and staking services.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Basically, enabling us to provide more comprehensive virtual asset solutions for high net worth and institutional clients. Meanwhile, holding an exchange license also allows the Group to participate more directly in industry infrastructure development and actively explore innovative product opportunities, including perpetual futures. Certainly, we aim to build a long-term ecosystem capability. In the future, we plan to explore secondary market trading for tokenized securities, integration with third-party brokers and one-stop solutions for virtual asset ETF issuers covering OTC, trading, custody and staking services. As traditional finance and virtual asset markets continue to converge, PantherTrade has the potential to evolve into a key infrastructure platform within the Hong Kong Web3 ecosystem. We think Hong Kong and Singapore markets, especially for the crypto part, they are still in the early stage of development. For Futu, we will continue to do investor education and product innovation.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

As a platform that has both brokerage and crypto exchange capability, we are very confident in the future growth potential of the overall crypto business. Thank you.

Chiyao Huang
Analyst at MS

[Non-English content]

Operator

Thank you. One moment for our next question. Our next question is going to come from the line of Emma Xu with BofA Securities. Your line is open. Please go ahead.

Emma Xu
Emma Xu
Analyst at BofA Securities

[Non-English content] So the first question is about the interest income. We thought that interest income declined 12.8% sequentially. Could you please provide the breakdown of your interest income by category, drivers of the quarter-over-quarter changes for each item, as well as the quarter-to-date trends? The second question is about the operating trends in second quarter so far. Could you update us the latest new founded accounts, AUM, including the net asset inflows and mark-to-market changes as well as the trading volume. Thank you.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

[Non-English content] Now let me very quickly translate. In the first quarter, approximately 40% of group interest income was from idle cash. Another roughly 40% contributed by margin financing. The remaining mainly came from the stock borrowing and the lending business. The quarter-over-quarter decline in interest income was mainly attributed to lower stock borrowing and idle cash interest income, while margin financing interest income achieved a sequential growth. Idle cash interest income decline due to two reasons.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

Number one is Fed rate cut in May, December last year was fully reflected in the first quarter. Secondly, heightened market volatility during the quarter drove more active buying dip behaviors among clients, leading to sequential decline in average daily cash balance, which also weigh on idle cash interest income. By contrast, supported by active margin trading activity in both the U.S. and Hong Kong, our margin financing balance increased meaningfully on QoQ basis, therefore contributed more margin financing interest income.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

At the same time, security borrowing interest income declined sequentially, mainly due to market factors as the implied volatility in the U.S. equity market was going down in the first quarter. Overall, short selling demand moderated, leading to a meaningful decline in security lending yield at the same time. Based on the current run rate in the second quarter, we expect the overall interest income to remain broadly stable QoQ. Thank you.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

Hello, Emma [Non-English content] Okay, let me quickly translate. So based on the current second quarter run rate, the net new funding accounts are expected to remain stable sequentially. Net asset inflows has maintained the strong growth momentum seen in the first quarter. While last Friday's regulatory developments created some short-term disruption to net inflows, the overall impact remains manageable. Benefiting from positive quarter-to-date mark-to-market performance as well as continued active client trading behavior, both AUM and trading volume have the potential to achieve double-digit sequential growth. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Charles Zhou with UBS. Your line is open. Please go ahead.

Charles Zhou
Charles Zhou
Analyst at UBS

[Non-English content] Good evening, this is Charles Zhou from UBS. I have two questions. The first, we have seen recent developments such as an acquisition of Bright Smart Securities, intensive marketing by Webull, the launch of the Hong Kong U.S. stocks trading function by Ant Bank and ZA Bank. How does the company view the intensifying competition in the Hong Kong markets? My second question is related to South Korean markets. We also know that Korean tech stocks have been performing very strong year to date. Does the company have any plans to expand into the Korean equity markets? Would appreciate if you can share some details such as your timeline or maybe the target markets. Thank you.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

[Non-English content] First, we think Hong Kong remains a market with significant long-term potentials. According to the Hong Kong Chief Executive's 2025 Policy Address, since the launch of various talents admission initiatives, more than 230,000 professionals have relocated to Hong Kong for work and development opportunities. Against a backdrop of rising global macro uncertainties, increased number of high net worth individuals and international capitals are also flowing to Hong Kong, driving continued expansion in market wealth and asset pools. For Futu, we remain very confident in our own competitiveness. Even several well-known peers have entered into Hong Kong market recent years, we have continued to see steady expansions in our customer base, client assets and market share. At the core of this achievement is multi-dimension competitive moat we have built over time, supported by time barriers to entry.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

On the product and service front, we have already established a comprehensive one-stop financial service platform in Hong Kong, while continuously enhancing innovative capabilities such as AI applications. Combined with competitive pricing, this enables us to deliver industry-leading user experience to our clients. More recently, we have also planned to launch Korean stock trading, as you just asked before. From a branding perspective, we have spent more than a decade deeply cultivating Hong Kong market and have established very strong brand recognition and client trust. An increasing number of clients are willing to place their core assets with Futu's platform over the long term, while the proportion of high-net-worth clients continues to rise in the past couple of quarters.

Arthur Chen
Arthur Chen
CFO at Futu Holdings

This type of brand equity cannot be replicated through short-term marketing spending alone. Finally, we do not view competition as a purely negative thing, because Hong Kong has always been one of the world's most competitive financial markets. Over the long run, competition drives industry innovations. For leading platforms with strong product capabilities, brand trust and ecosystem advantage, competition may in fact create opportunities to further consolidate market shares. More importantly, in Hong Kong as a global financial center, we believe our penetration into the tens of trillions of HKD of personal investable assets is still at a very early stage while our brand continues to mature. Supported by our long-term accumulated strength, we remain highly confident in our abilities to continue growth both in client and the client's assets in the Hong Kong market. Thank you.

Operator

Thank you. One moment, please.

Robin Xu
Robin Xu
SVP at Futu Holdings

Okay. [Non-English content] In April, Futubull and Moomoo officially supported real-time market data for South Korean stocks. Our team is currently actively preparing for the rollout of South Korean stock trading, which is expected to first launch in Hong Kong and Singapore in June, with more regions to follow progressively thereafter. Currently, many clients primarily gain exposure to South Korean equities indirectly through leveraged ETFs and similar products. As of May 26th, Futu Securities clients accounted for approximately 30% and 18% of the holdings in the CSOP 2x leveraged ETF on Samsung Electronics and CSOP 2x leveraged ETF on SK Hynix, respectively, reflecting strong client demand for South Korean equities, particularly names within the AI supply chain. As a leading one-stop investment and trading platform, Futu remains committed to providing clients with diversified global asset allocation opportunities and best-in-class trading experience.

Robin Xu
Robin Xu
SVP at Futu Holdings

We will continue to monitor the potential of other international stock markets and dynamically evaluate additional market access opportunities based on the client demand and commercial value.

Operator

Thank you. This will conclude today's question and answer session. I would now like to hand the conference back over to Alan Cui for closing remarks.

Alan Cui
Alan Cui
Investor Relations Manager at Futu Holdings

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.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

Executives
    • Alan Cui
      Alan Cui
      Investor Relations Manager
    • Arthur Chen
      Arthur Chen
      CFO
    • Leaf Li
      Leaf Li
      Chairman and CEO
    • Robin Xu
      Robin Xu
      SVP
Analysts
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