Futu drops 5%, Tiger 3% in pre-market as China fears persist

Futu Holdings fell 5% and Tiger Brokers dropped 3% in US pre-market trading Thursday as China's crackdown on cross-border securities continued to pressure online brokerage stocks.

"China announced a major crackdown on cross-border investment and said it would punish brokers it accused of illegally moving money to foreign markets," Reuters reported May 22, citing the country's securities regulator. The China Securities Regulatory Commission said it would penalize Tiger, Futu and Longbridge for soliciting business in China without an onshore license.

The May 22 announcement sent UP Fintech Holding, Tiger's parent, down 25.3% in a single session. Thursday's pre-market declines suggest selling pressure has persisted, with both stocks extending losses more than a week after the initial shock. Rosen Law Firm has opened a securities class action investigation into UP Fintech, alleging the company may have issued materially misleading business information to investors.

The regulatory action threatens the core business model of Chinese online brokerages that built their user bases by serving mainland Chinese clients through offshore entities. UP Fintech and Futu face potential penalties and the loss of a significant portion of their customer base if forced to comply fully with China's licensing requirements. The crackdown mirrors Beijing's broader push to tighten control over capital outflows and financial data, a trend that has reshaped the landscape for Chinese companies listed on US exchanges.

This article is for informational purposes only and does not constitute investment advice.