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The past few days I was in Hong Kong and it was a reminder that being on the ground means you see things that you can easily miss sitting in an office in London or Dubai.
Hong Kong is an odd market because CFDs are banned. But like in the US, rolling spot FX transactions are not treated as CFDs, so you can offer them here, although leverage is boring and capped at 20:1.
Other instruments, on equities or indices, are prohibited. An odd exception is that you can still offer precious metals trading. I had always thought this was capped at super low leverage rates to mirror the local metals exchange but it’s not.
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One of the first companies you get on Google when you search for gold trading here is Rakuten. They offer 200:1 via a local entity on MT4, with $0.15 fixed spreads.
To be honest, I doubt it matters that much as loads of providers are advertising from offshore here anyway and they’ve also completely captured SEO. So go figure with that.
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More interesting for me was the out of home marketing. The big players here from walking around seem to be Webull and Futu, which is the same company as moomoo. Futu is massive in APAC and Hong Kong is their home market so it’s not that surprising.
Webull is currently smashing the buses and billboards but apart from that I haven’t really seen them.
The more interesting phenomenon was physical shops. Futu has eight(!) physical stores around Hong Kong. Two of them were about 1 minute from my house. So I arrived, went out feeling jetlagged, and then saw a huge screen in a shop window with something that looked like TradingView. You try to escape but you never can.
Other brokers that are active in the local market have done the same thing, albeit to a smaller degree. Some of these I had never even heard of. For example, there is a forex and gold broker called Emperor that has a massive shop, which I randomly came across walking around the city.
Others that I came across were uSmart and a company called Forthright Securities. The latter firm also had a stall outside a large mall, handing out fliers.
Futu’s shops definitely seemed like the best designed and most spruced up. One of them was in Causeway Bay, which (at least from me walking around it) seems like a high end shopping neighbourhood.
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The first one I actually went into was next to Kimberley Road in Hong Kong – a street as charming and aesthetically pleasing as its name makes it sound – in a crappier neighbourhood. There were probably ten customers in there and a bunch of staff helping them. One point I’d note is the clients largely seemed to be more like local ‘aunties’ and ‘uncles’ who were 50+, rather than young people. But there were still a couple of people under 30 in there and one non-local.
The next day I decided to do more research and so went to one of the other Futu stores nearer to where I was staying. This actually doubles up as a cafe, so you can get a coffee and sit around.
I really have no idea what the guy who worked there must have thought, seeing some strange, sweating gweilo walk in, wearing a Uniqlo shirt with no sleeves, and demanding to know if they offered forex trading.
Futu does this, he told me, but he looked slightly disgusted by the question. With more probing, he said that this is something people will do with other providers, like [redacted], who will give them 500x or 1000x leverage.
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I did get some more interesting tidbits of information from him. For example, part of the reason the shop concept felt so weird to me is that it’s (1) totally alien – I’ve never seen a broker offer a physical store like this before – and (2) it completely goes against the automated, fully digital experience that most companies are now embracing. Consequently, and given the high costs of renting a place, I asked if they actually get customers from it to make it worth their while.
“On a normal working day, I will open 20 to 30 accounts,” he told me. “Some people already have an account and they come in. You get a 50% discount on coffee if you’re a VIP Futu member, so sometimes you get existing customers that upgrade their account as well.”
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Futu’s own figures say they served 40,000 customers via their physical stores in one year, so I don’t know how that tallies with those numbers. As an aside, that would mean about 0.6% of Hong Kong’s adult population was served by these stores in one year.
The other point I wanted to know was whether Futu get big deposits from people who opened accounts in store. My logic here was that as it’s more ‘aunties’ and ‘uncles’ opening accounts, you’d expect them to have more money – boomers. Whether that reasoning was correct, I don’t know, but he said it does indeed happen.
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“It’s common for people to come in, open an account and deposit HKD 3m or HKD 4m,” he said. “They do it here in the store. It’s not every single person but it’s enough that I am not surprised when it happens.”
There you go. Honestly I thought the whole concept was cool and it must be amazing for brand building. Will we see a CMC Markets cafe or IG pub somewhere in London soon? Don’t count on it.
