Cindy Wang: So, thanks management for giving me this chance to ask questions. So I have two questions. First question is related to the U.S. market. So, in fourth quarter, the average net asset inflow of new paying clients for their first month of onboarding to increase by 40% quarter-over-quarter. So, what’s the U.S. client acquisition strategy in fourth quarter to help the new asset inflow increase? And do you have any expectation in terms of net asset inflow and the number of new paying client contribution in U.S. in 2023. So the second question is related to customer acquisition costs. So in fourth quarter, the CAC was down 11% quarter-over-quarter. Can you kind of give us the recent declines there? And if this trend will be sustained in the first quarter of 2023 and how do we see the full year? Thank you.
Arthur Chen: Thank you. I will take your second question first. I’ll leave the first question to Leaf to answer. For the CAC in the fourth quarter, actually, we further optimized our channel distributions in Hong Kong and also in overseas markets. We adjust certain incentives to our clients on a dynamic basis not only just focus on the speed of our clients, but also, more importantly, on the quality of our clients. Going forward, I think it is still very difficult to predict 2023 situations. I think our base case will be the CAC largely will be the same as 2022. Client acquisition in the U.S. in Q4 slowed down on a sequential basis. On one hand, market sentiment remained weak, which affected clients’ willingness to enter the market.
And on the other hand, we deliberately slowed down client acquisition to focus on improving client quality. And as mentioned, the first month average net asset inflows from our new paying clients in the U.S. increased by around 40%, mainly because we focused on attracting client assets and adjusted the reward threshold. And in the first quarter this year, we already launched multi-leg options for U.S. stocks and we plan to add and improve advanced derivative products and functions, such as index options this year. And going forward, we will continue to enhance our product capabilities and gradually improve our product portfolio centered on U.S. docs and U.S. derivatives to enhance our competitiveness in the local market, while also controlling client acquisition cost and focusing on improving client quality.
And regarding the guidance, we now have no guidance for the U.S. clients or asset inflow growth in 2023. Thank you.
Operator: Thank you. Our next question comes from Frank Zheng from Credit Suisse. Please ask your question, Frank.
Frank Zheng: This is Frank Zheng from Credit Suisse. I have two questions. The first one is new market entries. What is the latest progress in the timetable? Is the services in Japan already online? The second question is related to interest rates, fourth quarter interest expense surged quarter-on-quarter and we would like to understand, in general, when interest rate is in an up cycle, with the interest rate spread of margin financing fixed rate value in business be affected considering that the fee rate income is relatively fixed, but the fee expenses could elevate.
Arthur Chen: Thank you very much. Frank, I will take both of your questions. Number one, in terms of the new market expansion, I think you are right. We do have some new markets in our pipelines. In the base case, we are looking for to expand two new markets, both are in Asia this year. I think though, in terms of total addressable market for these two potential markets, will be very meaningful. But in terms of the exact timeline, it is still very difficult to predict nowadays given we are still waiting for the regulators’ confirmations for our license approval. Hopefully, we will give you some update more and more color in the coming quarters. Second, regarding the interest expenses, I think relatively speaking, the spread will be narrowed a little bit given that our pricing strategy on the margin financing is fixed rate.
But on the funding cost side, it will be impacted from the high interest rate environment, but thanks to our U.S. sales clearing capabilities and also a very strong balance sheet. If you look at our total equity base, you can see actually, a lot of margin financing, the funding source came from our own money. So therefore, I think the pressures from the funding cost is still manageable in 2023. Thank you.
Operator: Thank you. Our next question comes from Leon Qi from Daiwa. Please ask your question, Leon.
Leon Qi: Hi. This is Leon Qi from Daiwa. Thanks for taking my questions. Two questions today. Firstly is regarding Hong Kong business. We noticed that recently, Futu has been carrying out more and more offline services. I appreciate if management can give us any color on how should we think about our offline business strategy in Hong Kong? Does that help us in terms of increasing the customer wallet share in AUM? And the second question is regarding your latest plans for Hong Kong listing. Thank you very much.
Arthur Chen: Thank you very much Leon. I will take your second question first, and I will leave the first question to Leaf to answer. There is no any confirmed timelines for our Hong Kong IPO listing nowadays. I think the top priority for the management this year is to fully cooperate and collaborate with the Mainland regulators to complete our inspection as soon as possible. So, this is our top priority and we will further assess the feasibilities of our Hong Kong IPO listing later, depending on the market conditions and also depending our use of proceeds. Thank you.
Leaf Li: So, in Hong Kong, Futu has higher penetration rate among the younger generations than the middle age groups. And we hope to better serve the middle age groups of clients. And compared with the younger generations on our platform, we see that the middle age groups are generally less tax savvy and have longer conversion cycles. As such, we carried out offline account opening services in Hong Kong as face-to-face communication can shorten the conversion cycle of these clients. And we also plan to reach potential clients through multiple touch points, including offline campaigns, cooperation with KOLs, etcetera, so as to improve the quantity and the quality of the clients acquired. Thank you.
Operator: Our next question comes from the line of Katherine Lei from JPMorgan. Please ask your question, Katherine.
