Beijing is sending more friendly signals to businesses lately but not to Robinhood-like online brokers in the new year.
back to economic growth and edging away from strict pandemic restrictions and crackdowns on private businesses. Futu’s shares gained 82% in November while Tiger’s rose 40%.
But China’s renewed goodwill toward business doesn’t seem to extend to Futu and Tiger. Cross-border securities transactions can facilitate capital outflows, potentially undermining China’s tight capital controls—which have helped arrest yuan depreciation and support its real-estate market at critical moments, including during the currency and debt market ructions of 2015 and 2016.
Regulators said the two brokers have to stop taking new mainland Chinese customers. Existing domestic investors can continue to trade, but they won’t be able to deposit new money into their accounts. Futu and Tiger have diversified their customer bases outside mainland China since state media slammed them for cross-border transactions. But mainland Chinese investors still accounted for around a third of Futu’s paying customers as of June, compared with more than two-thirds at the end of 2019.
Chinese businesses have breathed a sigh of relief as the government ditches its previously strict zero-Covid policies and puts its attention back on growth. But not everyone will benefit from the warmer atmosphere—China’s online brokers remain firmly out in the cold.Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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