In terms of infrastructure, we are now fully self-clearing for Hong Kong equities, which brings down the Group’s total clearing expense to below 10%. Our proprietary system also allows us to offer differentiated services, such as fractional share and offer portfolio buying power for U.S. and Hong Kong trading. Thanks.
Judy Zhang: Thanks.
Operator: Thank you Judy. Our next question comes from the line of Cindy Wang from China Renaissance. Please go ahead, Cindy.
Cindy Wang: [translated] Thanks management for taking my question. This is Cindy from China Renaissance. I have two questions. First question is related to customer acquisition costs. Customer acquisition costs in second quarter was US $162, which is at a relative stable level. How do you lower customer acquisition costs and what’s the strategy for customer acquisition costs to–customer acquisition strategy going forward? The second question is Tiger’s non-GAAP net profit has turned positive for the fifth consecutive quarter, so together with high interest rate environment, the non-GAAP profit margin is over-extending. Does that mean Tiger has reached an inflection point from breakeven to profitability? Thank you.
Tianhua Wu: [translated] Okay, your first question about the CAC. In the second quarter, the average CAC was $162, which was further decreased compared to $171 in the first quarter, reaching historically low levels. In the second quarter, we paid very close attention to CAC quality and payback period, and we will not jeopardize our client quality and reasonable ROI ratio merely for a number of funded accounts. With the underperformance of Chinese ADRs and Hong Kong technology names in the second quarter, our clients experienced some mark-to-market losses; however, strong net asset inflows led to a 7.1% increase in total client assets compared to the previous quarter. This indicates that we have maintained good customer quality while reducing the average CAC.
Furthermore, if we look at the average CAC from newly acquired clients through [indiscernible] channels in the second quarter, their average CAC is more than twice the overall average CAC. This demonstrates that we have gradually gained more organic traffic from overseas regions that can save us some customer acquisition costs. Thank you. I’m glad to say our non-GAAP net profits reached US $15 million in the second quarter, which is the highest quarterly net non-GAAP profit in the past two years. Looking back at the early stage of the interest rate hike cycle, during reduced market activity we experienced some quarterly losses; however, through optimizing interest income and prudent capital deployment, we gradually improved our profitability.
Over the past two quarters, our net profit margin has been expanding, indicating a robust and healthy business model for the company. Given most of our costs are relatively fixed and tied to market activity, we believe that if we can better penetrate in Hong Kong, Australia and New Zealand markets, or if there is overall improvement in the market backdrop, we can enjoy more operating leverage, which leads to more stable profit margins. To answer your question, assuming there is no extreme market swings, we should be in the black in terms of profitability. Thank you.
Operator: Thank you Cindy. Our next question comes from the line of Ling Tan from Daiwa Capital Markets. Please ask your question, Ling.
Ling Tan: [translated] Thank you management for taking my questions. This is Ling from Daiwa. I noticed that there is–you received $7.8 billion other non-operating income under the P&L. Can management provide more color in terms of the breakdown of the non-operating income and [indiscernible] in the next two quarters? Thank you.
John Zeng: [translated] About half of the other income comes from FX [indiscernible] due to USD appreciation against other currencies this quarter, so this is a pure accounting item. The other part of the other income actually comes from our treasury management. As you can see from our balance sheet, our financial instrument balance has increased quarter-over-quarter, so we are doing treasury management. We are investing some of those monies into U.S. short term bonds, so we think this kind of interest income will be sustainable for the next few quarters. Thanks.
