Leaf Li:
Daniel Yuan: In Singapore, we have over 200,000 paying clients now, which we think is about 15% of market share, and we think there’s a lot of room for further growth. And in the third quarter, we recorded decent growth. It’s mainly because we introduced lower risk wealth management products, such as money market funds, to capture the conservative investment appetite of Singapore clients. And in the rate hike environment, the yields of the money market funds kept rising and become rather attractive to Singapore clients. And that’s driving the growth of local new paying clients. And we also continue to optimize the account opening and the deposit process, thereby driving conversion from users to clients and also to paying clients.
And meanwhile, we also saw improving client quality. So, for the clients that we acquired in third quarter, the average net asset inflow in the first month exceeded 9,000 Singapore dollars, while the average net asset inflow in clients acquired in January this year will take about three months to reach this level. And as of the end of 3Q, the average assets of our Singapore clients was over 10,000 Singapore dollars, recording a modest Q-on-Q growth, and the increase in net asset inflow was able to more than offset the negative impact of the weak equity market. Thank you.
Operator: We’ll now take our next question. Please stand by. This is from the line of Zeyu Yao from CICC. Please go ahead.
Unidentified Analyst: Okay. I will translate my question. Thanks management for taking my question. This is Zeyu Yao from CICC. First, congratulations on the exciting results achieved this quarter, despite the volatile market environment. I have two questions here. The first one is about the client region breakdown. Would you please introduce more on the region breakdown of the newly added and also the existing paying clients? And also my second question is about client assets breakdown. We see that the total client assets decreased by 15% quarter-over-quarter? Would you please give us a breakdown of the asset inflow and the market to market demand?
Arthur Chen: Thank you. My colleague, Robin, will answers two of your questions. Thank you.
Robin Xu:
Daniel Yuan: First of all to your question on the breakdown of our paying clients. So among the new additions and the third quarter, Asia contributed about half of that, among which Singapore was the main contributor followed by Hong Kong, and the U.S. contributed roughly the other half. And as of the end of the third quarter, so overseas paying clients was around 30% in which Singapore outnumbered the U.S. by a small margin. And then, in total, Hong Kong contributed close to 40%. And overall Singapore and U.S. each contributed less than 20% of our overall paying client base. And to your question on client assets, so market fluctuations and clients’ net asset inflows were the most important factors affecting our total client assets.
And in third quarter the net asset inflow in clients, in all markets were quite robust and the total amount remained flat compared with the second quarter. However, the decline in Hong Kong and U.S. stock markets dragged down the total client assets. Thank you.
Operator: We’ll now take the next question. Please stand by. And this is from Leon Qi from Daiwa.
Leon Qi: This is Leon Qi from Daiwa Securities. Thanks a lot for management for taking my questions. I have two questions today, one on Singapore and the other Hong Kong. Singapore, I just want to know that what management is thinking about in terms of your future product pipeline. Understand you have been launching in money market funds and the wealth management products in order to expand your product ecosystem, especially now equity related. What else in our product ecosystem toolbox? Are we considering any new asset classes or sub classes, for example, crypto? Wondering how management thinks about these new asset classes. Second question is on Hong Kong. Well, understand there is still substantial upside in terms of per customer AUM in Hong Kong.
But I appreciate if management can give any color on your user upside in Hong Kong. Do you think Hong Kong is already quite penetrating in terms of our current position? How do we see our future growth from Hong Kong? Is there from new users or from per user AUM? Thanks a lot.
Arthur Chen: Thanks a lot Leon. My colleague, Robin, will answer your first question about the Singapore; and our founder, Mr. Leaf Li will answer your second question about Hong Kong. Thank you.
Robin Xu:
Daniel Yuan: So, since last year, we have continued to enhance our product functionality in Singapore. And going forward, we have a couple of new products that we want to roll out to the retail clients, including the Hong Kong options trading and select U.S. options trading as well. And we also plan to launch leverage ForEx trading in Singapore, and also bond trading. And we also acquired self-clearing license in Singapore. So, going forward, we’ll build our self-clearing capability and allow our clients to transfer their assets to CDP accounts. And last but not least, I think we’re also investing into our enterprise services, mostly geared towards a lot of family offices in Singapore. Thank you.
Leaf Li:
Daniel Yuan: So lately, Futu’s penetration rate of our Hong Kong retail investors is around 20 per client. And we think nearly 10% of the middle aged, aka 35 to 55 per client — sorry, 35 to 55 year old Hong Kong residents. So, our penetration among our population is around 10%. And I will continue to focus on further penetrating these client cohorts. In the long run, we’ll also pay more attention to asset related matrices, such as clients’ net asset inflows. And we intend to continue to increase the wallet share of our clients through expansion of our product offerings, and also increase in client engagement. Thank you.
Operator: We’ll now take our next question. Please stand by. This is from the line of Frank Zheng from Credit Suisse. Please go ahead.
Frank Zheng: First question is on new market entrees. What is our current progress in terms of exploring new markets and any tangible plans in 2023? Second question is on current acquisition expense. We note that in the third quarter CAC is around HK$4,000, how shall we think about CAC going forward? Also company mentioned 1% to 1.5% expense ratio based on net asset inflow. Are we on track in terms of this metric?
Arthur Chen: I will take your second question first and our founder, Mr. Leaf Li, will answer your first question about new market expansion. For the CAC, I can understand everybody may be slightly disappointed about our third quarter results. I think there are some reasons behind that. Number one is definitely the market conditions in the third quarter is quite very challenging. Secondly, we actually continue to make some brand equity efforts in Hong Kong and in Singapore, despite some of our peers start to set back their marketing campaigns, as we do think in brand equity building up is a very long-term process and we need some patients in the market volatility conditions. And thirdly, as Leaf mentioned in opening remarks, we try to do some new initiatives, such as silver bond promotions in Hong Kong, which unfortunately didn’t pay out very well, which increase our CAC in the third quarter.
Down the road I think in the fourth quarter maybe continue very challenging given the quarter-to-date market conditions. So, our CAC levels in the fourth quarter may continue to be on a relatively high levels. For the asset acquisition costs, I think you’re right we are still well on track in the range of 1% to 1.5% year-to-date. Thank you very much.
Leaf Li:
Daniel Yuan: We expect to enter into new overseas markets in the first half of next year. And we’re also dynamically exploring the opportunities in some overseas markets. And we also consider launching certain select product features in a new market first for validation purposes and collect the feedback from the market, so as to constantly optimize and upgrade the products to meet the needs of the local clients. Thank you.
Operator: Thank you. We’ll now take our next question. Please standby. This is from the line of Emma Xu from Bank of America. Please go ahead.
