After cracking down on the Internet, education, real estate, and cryptocurrencies last year, the CCP has taken another crackdown on brokerages in recent days.
On December 30, the China Securities Regulatory Commission announced on its website that it would rectify the cross-border business of Futu and Tiger, prohibiting the two institutions from soliciting domestic investors, developing new domestic customers, and opening new accounts, and prohibiting foreign institutions from To accept the transfer of incremental funds into such investor accounts, only existing domestic investors are allowed to carry out transactions through the original overseas institutions. An agency will be dispatched to verify Futu and Tiger.
Although Futu and Tiger have some overseas customers, their main users are from mainland China, providing overseas investment for Chinese retail investors. This move can be said to be a disaster for the two brokerages.
Affected by this news, the stocks of the two institutions fell sharply on the 30th. As of the close of US stocks, Futu Securities fell 31%, and Tiger Securities fell 28.51%.
That night, Futu and Tiger responded, saying that they would “cooperate with the corresponding rectification work in strict accordance with regulatory requirements.”
The day before, Futu announced that it would postpone the listing of its Class A ordinary shares on the Hong Kong Stock Exchange. And last week, Futugang said it would start stock trading in Hong Kong by introducing a listing.
According to public information, Futu Holdings was established in Hong Kong in 2012 by Tencent’s strategic investment. Its business involves US and Hong Kong stock investment and wealth management; it holds licenses in Hong Kong, the United States, New Zealand and Europe, but does not have a Chinese license.
Tiger Securities is an Internet securities company established in 2014. Its main business is overseas capital markets. Its founder is the former head of Netease Youdao search technology, and has obtained investment from well-known investment institutions and individuals such as ZhenFund, China Renaissance, Wang Xing, Xiaomi Technology, Xianfeng Evergreen, and Jinglin Investment.
In October this year, Tiger obtained a Hong Kong license through the acquisition of Haiyue Securities. Currently holds 33 financial licenses and qualifications from the United States, Singapore, Australia, New Zealand and other countries.
On December 26, the CCP adjusted the new crown virus (also known as the CCP virus, Wuhan pneumonia, Covid-19) from “Class A and A” to “B and B”, and announced the cancellation of overseas travel restrictions from January 8 .
Some people believe that the CCP’s move is to strictly control the outbound transactions of RMB. That is to say, people can leave China, but money cannot.
According to media reports, the average assets of Futu customers in 2020 reached more than 70,000 US dollars, and the exchange amount of many customers within a year far exceeded the annual exchange limit of 50,000 US dollars stipulated by the CCP.
There are also views that this is another opportunity created by the CCP government to fine money.
According to the official information of the CCP, as of the end of September 2022, China’s foreign exchange reserves will be US$3,052.4 billion, foreign debts will be US$2,636 billion, and net foreign exchange reserves will be US$416.4 billion. In August 2021, the foreign exchange reserves will be 3.2 trillion US dollars, the external debt will be 2.6 trillion US dollars, and the net foreign exchange reserves will be 600 billion US dollars.
It can be seen from this that the growth rate of the CCP’s foreign debt is much higher than the speed of foreign exchange reserves.
After Evergrande stopped repaying foreign debts last year and gave priority to repaying domestic debts, CIFI Holdings Group also announced last month that due to deterioration in cash flow, it has suspended the payment of all overseas debts, but will repay domestic debts to “maintain domestic financing”.
Some people believe that this shows that the CCP’s US dollar assets are already very tight, so domestic individuals are prohibited from investing in overseas securities.
American economist and commentator Qin Weiping believes that China’s financial crisis has already occurred and only needs to be fully erupted.