Two brokers vie to be Asia’s Robinhood as Hong Kong expands crypto support
Stock analysts are optimistic about a surge in Asian crypto trading following the implementation of Hong Kong's stablecoin bill on Friday. Stablecoins are virtual assets pegged to government-issued fiat currencies. Hong Kong's legislation formalizes how financial firms can issue and manage these virtual assets, similar to the U.S. GENIUS Act.
Morgan Stanley analysts believe the primary use of stablecoins will be in crypto trading, potentially attracting more institutional investors. They favor online brokerage Futu Holdings, rating it overweight with a price target of $164.25. Meanwhile, Citi analysts prefer Futu’s rival, Up Fintech (also known as Tiger Brokers), upgrading it from neutral to buy in a report published on July 21. Citi maintained a neutral rating on Futu, citing its recent stock price appreciation.
Both Futu and Up Fintech, which went public in the U.S. in 2019 before Robinhood's IPO, operate online brokerages for trading stocks and cryptocurrencies. Originating in mainland China, they have shifted focus to Hong Kong and Singapore due to Beijing’s capital controls and crypto bans.
The crypto trading market in Hong Kong and Singapore is valued at approximately $640 billion, even after factoring in competition from unlicensed mainstream crypto exchanges, according to Citi analysts. This positions Up Fintech and Futu to potentially replicate Robinhood’s growth trajectory.
Robinhood’s recent stock surge has been largely driven by its crypto trading revenue, which doubled in the first quarter year-over-year, outpacing its overall 50% revenue growth. Crypto revenue grew from 3% of total revenue in 2020 to 21% in 2024, according to Citi.
Robinhood is scheduled to release earnings on Wednesday local time, while Up Fintech and Futu have not announced their next earnings dates. Citi raised price targets for both stocks: Up Fintech’s target increased from $9.50 to $14, and Futu’s from $113 to $176.
Citi’s optimism for Up Fintech is partly due to potential partnerships with Avenir Group, an investment firm linked to Huobi’s founder. Avenir acquired a 5.9% stake in Up Fintech in late April. Citi noted potential upside if Avenir uses Up Fintech as its designated crypto exchange for OTC trading or as its custodian bank, which could boost Up Fintech’s crypto business through higher custodian fees.
Despite differences between the U.S. and Hong Kong crypto environments, Hong Kong, as a special administrative region, serves as China’s financial test bed to remain globally competitive. Both Citi and Morgan Stanley expect Hong Kong’s stablecoin initiatives to initially focus on international payments using the Chinese yuan.
Hong Kong’s broader ambitions in crypto are underscored by the upcoming bitcoin conference next month, headlined by Eric Trump, son of former U.S. President Donald Trump.
—CNBC’s Michael Bloom contributed to this report.
Read the original article on CNBC
FAQ
What is the significance of Hong Kong's stablecoin bill?
Hong Kong’s stablecoin bill signifies a structured method for how financial firms can issue and manage virtual assets like stablecoins, potentially stimulating crypto trading in the region.
Who are the key players favored by analysts in the Asian crypto market?
Morgan Stanley analysts are optimistic about Futu Holdings, whereas Citi analysts favor Up Fintech (Tiger Brokers).
What market value do Hong Kong and Singapore represent in crypto trading?
The crypto trading market in Hong Kong and Singapore is valued at approximately $640 billion.
Why is Robinhood’s stock performing well?
Robinhood’s stock surge is primarily due to increased crypto trading revenue, which has doubled year-over-year.
What upcoming event highlights Hong Kong's ambitions in crypto?
Hong Kong’s ambitions are highlighted by an upcoming bitcoin conference featuring Eric Trump.
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