The Chinese government has intensified its supervision of cross-border stock trading to tighten control over capital outflows, resulting in Futu Holdings founder and CEO Hua Li’s fortune shrinking by more than a quarter in just one day.
According to the Bloomberg Billionaires Index, as of last Friday (May 22), Hua Li’s fortune dropped by $1.7 billion (6.739 billion ringgit) to $4.7 billion—now less than half of his $10.1 billion fortune at the end of October last year. Most of his wealth comes from his holdings in the U.S.-listed company Futu Holdings.
Futu’s share price plunged 28% last Friday, marking the largest single-day drop in over three years.
On the same Friday, the China Securities Regulatory Commission (CSRC) announced that Futu Securities and Longbridge Securities, both registered in Hong Kong, as well as Tiger Brokers, registered in New Zealand, had carried out securities-related business within mainland China without approval or the necessary licenses, violating securities, fund, and futures laws. As a result, the CSRC decided to penalize the three companies and confiscate related illegal gains from domestic and overseas entities.
Later, Futu announced that regulators intend to impose a fine of 1.85 billion yuan (1.086 billion ringgit) on the company; Tiger Brokers' parent firm UP Fintech disclosed that its relevant subsidiaries face a total of 411 million yuan in fines and confiscation of illegal gains.
CITIC Securities estimates that the asset scale involved with Futu is about HK$150-180 billion (75.7–90.9 billion ringgit), while Tiger Brokers is about HK$45-50 billion.
Bloomberg News noted that this regulatory action is in stark contrast to the situation a few months ago. As recently as March, Hua Li’s companies pointed out that they benefited from the Hong Kong IPO boom and claimed that more than half of the IPO issuers in Hong Kong partnered with Futu.
With more and more Chinese citizens participating in stock investment, Hua Li has become one of a group of brokerage founders who rapidly amassed vast fortunes by leveraging online brokerage businesses.