S&P Global Ratings has reaffirmed Futu Holdings’ investment-grade credit status, keeping the company’s long-term issuer credit rating at BBB- with a stable outlook. The decision comes as Futu’s share price trades at roughly half the level reached late last year and follows a significant regulatory shock from Chinese authorities.
Less than two weeks before the rating action, Chinese regulators proposed a substantial penalty against Futu that wiped out about a quarter of the company’s market value in a single trading session. The stock fell about 27.5% on 22 May when the news of the penalty broke and has not recovered those losses. Futu shares currently trade around US$103, down roughly 50% from their 2025 peak above US$200.
Rating Rationale and Business Profile
S&P cited Futu’s strong market position in Hong Kong as a key factor supporting the reaffirmed rating. The agency also pointed to the company’s expansion into new geographies as a buffer against the planned wind-down of its mainland China business over the next two years. According to S&P, Futu’s capitalization is “very strong” and a core element underpinning its creditworthiness.
Despite investor concerns reflected in the share price, Futu’s underlying operations continued to grow. In the first quarter, revenue rose 24.7% year over year to HK$5.86 billion (US$746.9 million), while total trading volume reached a record HK$4.15 trillion. However, net income dropped 61.2% to HK$831 million (US$106 million), with almost the entire decline attributed to the proposed regulatory penalty, which Futu booked in full as a subsequent event under U.S. accounting rules.
Details of the Proposed Penalty
The China Securities Regulatory Commission and its Shenzhen bureau allege that Futu entities in mainland China and Hong Kong conducted securities, fund and futures businesses without the necessary licenses. The proposed sanction totals about RMB1.85 billion, including approximately RMB470 million in confiscated gains and RMB1.38 billion in fines, along with a personal fine for founder and CEO Li Hua.
Under the proposal, existing mainland Chinese clients will face a two-year wind-down period during which they may only sell or withdraw, rather than initiate new business. Futu has indicated that mainland accounts represent about 13% of its funded client base. The action is described as the sharpest step so far in a regulatory campaign that has targeted cross-border brokers for several years.
Futu is not alone in facing heightened scrutiny. On the same day, regulators signaled similar measures against a New Zealand unit of Tiger Brokers and a Hong Kong entity of LongBridge Securities, underscoring broader regulatory pressure on cross-border brokerage activities linked to mainland investors.
