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Chinese brokerage apps ride on Singapore’s retail trading frenzy

Written by Stephanie Pearl Li Published on     3 mins read

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Tiger Brokers and Futu are battling for Gen Z traders in Singapore amid intensifying interest in investments.

Similar to how stock trading app Robinhood created a retail investor craze in the US, two Chinese apps—Xiaomi-backed Tiger Brokers and Moomoo, which is endorsed by Tencent—have become quite popular among Singapore’s tech-savvy Gen Z.

“The space is dominated by traditional brokers who charge high trading fees, discouraging amateur investors from trading,” said Tan Kel Vin, a millennial YouTuber who has amassed 21,800 subscribers on his channel that focuses on topics around investing and personal finance. Tiger and Moomoo offer zero-commission trading and a sleek user interface, providing easier navigation for amateur investors.

Owned by UP Fintech Holding, which trades on the Nasdaq, Tiger Brokers has seen a bullish response from cohorts aged between 18 and 24 that account for 30% of its users in Singapore. “There is no doubt that it is in their blood to explore new experiences and skills online, especially when access to data and information is as simple as just a click,” Tiger CEO Eng Thiam Choon told KrASIA.

One year after Tiger launched in Singapore, Nasdaq-listed Futu Holdings arrived in the city-state with its Moomoo app. In its Q1 results, released on Wednesday, the firm highlighted a 70% net increase in its paying customers from Singapore, Hong Kong, and other overseas markets. “Client acquisition in Singapore has far exceeded our expectations since our official launch on March 8, and the strong momentum has continued into the second quarter,” said founder and CEO Leaf Hua Li in a statement.

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But the rising popularity of investment apps has also led to concerns that the fledgling investor class might not be aware of the risks. “We have seen some young and new investors getting into it without fully understanding how online trading works,” said Eng. He observed a “lack of research,” “ongoing social media trends,” and their peers as motivators behind many decisions.

Tan echoes Eng, admitting problems with regards to the financial literacy of young traders. “Some of my subscribers always ask me whether they should buy this stock or that stock; I always tell them they should buy the stocks that they like, and be prepared that all investments come with a certain degree of risk,” he said.

Tiger Brokers’ data shows a 4-to-1 split between traditional and volatile stocks among Gen Z users. 45% of them prefer long-term stocks such as Apple, Boeing, and Carnival, and 35% choose real estate trusts and exchange-traded funds across the US, Hong Kong, and Singapore markets. While the majority seem to diversify their portfolios, tech stocks such as Tesla, Apple, Nio, and Singapore-listed Medtechs International were the most traded stocks by its Singapore customers in Q3 2020, according to Tiger.

In the US, a trading hype initiated on Reddit saw shares of video game retailer GameStop rising 1,600% at one point in January. It prompted the US Congress to summon Robinhood CEO Vlad Tenev to a hearing to examine if small investors have been put at a disadvantage and what role mobile trading apps were playing in the matter. This followed the attempted suicide of a 20-year-old college student who mistakenly thought he lost around USD 750,000 in an investment on the platform, which turned out to be an interface issue.

In light of this, Eng advises new investors to diversify their portfolios to mitigate potential risks and avoid highly valued “trending” stocks. “There is never a guarantee for stock returns as many factors, including unprecedented events, can impact their prices,” he said.

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