Why Futu And UP Fintech Shares Are Plunging Today

Why Futu And UP Fintech Shares Are Plunging Today
  • Tencent Holding Ltd TCEHY backed Chinese online broker Futu Holdings Limited FUTU unexpectedly deferred its Hong Kong listing less than a day before its anticipated debut on December 30.
  • Futu said it was "clarifying certain matters" with the Hong Kong Stock Exchange.
  • Futu was the latest U.S.-listed Chinese firm to bid to dual list its shares in Hong Kong to reach a broader investor base and hedge against the risks of getting kicked off U.S. exchanges.
  • Also Read: Pinduoduo And Other US Listed Chinese Tech Companies Abort Dual Listing Options
  • Futu and its main rival UP Fintech Holding Limited TIGR, operated in a gray area for their mainland China businesses, Bloomberg reports.
  • The companies enabled millions of local investors to evade capital controls to trade shares in markets such as Hong Kong and New York. 
  • A senior central bank official has questioned the legitimacy of online trading firms, calling their services "illegal" at least twice since last 2021.
  • The last-minute delay "raises red flags" and "could be of concern to investors and tarnish its profile among retail clients in its largest market," Bloomberg Intelligence analyst Sharnie Wong wrote.
  • Tencent is Futu's second biggest shareholder after billionaire founder Leaf Li.
  • Price Actions: FUTU shares traded lower by 27% at $42.95 on the last check Friday. TIGR shares traded lower by 29% at $3.37.

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