Hello, ladies and gentlemen, welcome to Futu Holdings First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO and Head of IR at Futu. Please go ahead, sir.

Thanks, operator, and thank you for joining us today to discuss our first quarter 2024 earnings results. Joining me on the call today are Mr. Leaf Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Xu, Senior Vice President. As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain, and are outside of the Company's control. Forward-looking statements involve inherent risk and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its annual report. With that, I will now turn the call over to Leaf. Leaf will make his comments in Chinese, and I will translate.

[Foreign Language] Thank you all for joining our earnings call today. Bolstered by strong market performance and solid execution in new markets, we wrapped up the quarter with approximately 1.9 million paying clients, representing a 24% growth year-over-year. In the first quarter, we added 177,000 paying clients, which more than quadrupled from the year-ago quarter, marking the third highest quarterly growth in history. Three months into the year, we have already achieved over 50% of our full year guidance of 350,000 net new paying clients. Given the year-to-date momentum, we would like to raise this guidance to 400,000 for now. Despite the rapid expansion of our client base, our quarterly paying client retention rate remained above 98%. [Foreign Language] Client acquisition in Hong Kong and Singapore both accelerated to double-digit sequential growth. Yet their contribution to new paying clients dwindled to around one-third amid strong triple-digit new paying client growth in other markets. [Foreign Language] In Japan, our continued focus on refining product experience and streamlining the account opening process, coupled with targeted marketing initiatives led to robust growth in new paying clients and average client assets. In addition, our Moomoo App continue to garner user interest in Japan with cumulative downloads reaching 1 million in May. [Foreign Language] In Malaysia, our industry-leading trading experience, rich market information and data, interactive social community, and superior brand equity led to an above expectation growth. Client engagement and trading velocity also surprised us on the upside. Within six weeks of our brokerage business launch in Malaysia, we attracted over 100,000 registered clients and became the most downloaded financial app. Though client acquisitions decelerated into the second quarter, we still expect meaningful contribution from Malaysia for the rest of the year, and are committed to defending and extending our market leadership. [Foreign Language]…

Thank you, Leaf and Daniel. Please allow me to walk you through our financial performance in the first quarter. All the numbers are in Hong Kong dollar unless otherwise noted. Total revenue was HKD2.6 billion, up 4% from HKD2.5 billion in the first quarter of 2023. Brokerage commission and handling charge income was HKD1.1 billion, up 20% Q-over-Q and largely flat year-over-year. With client trading interest piling on AI and crypto-themed stocks with high stock price, the blended commission rate decreased from 8.8 basis points to 8.1 basis points due to our per share pricing model in the US. As a result, brokerage income grew at a slower rate than trading volume, both Q-o-Q and year-over-year. Interest income was HKD1.4 billion, up 5% year-over-year and 1% Q-o-Q. The year-over-year increase was mainly driven by higher margin financing income due to an increase in daily average margin balance and higher interest income from bank deposits. The Q-over-Q increase was mostly driven by higher interest income from bank deposits due to the increase in daily average idle cash balance. Other income was HKD156 million, up 24% year-over-year and 14% Q-o-Q. The year-over-year increase was primarily attributable to higher fund distribution income and the Q-over-Q increase was mainly driven by higher currency exchange income. Our total costs were HKD417 million, an increase of 62% from HKD291 million in the first quarter of 2023. Brokerage commission and handling charge expenses were HKD60 million, down 17% year-over-year and up 2% Q-o-Q. Brokerage expenses didn't move in tandem with brokerage income year-over-year, mainly due to cost savings from our US self-clearing business. The expenses grew at a narrow margin than income sequentially due to a non-recurring cost associated with self-clearing migration of Singapore stocks during the fourth quarter of 2023. Interest expenses were HKD313 million, up…

[Operator Instructions] Our first question comes from the line of Chiyao Huang from Morgan Stanley. Please ask your question, Chiyao.

[Foreign Language] So the -- I got two questions. First question is regarding the progress we are making in Japan in terms of the number of paying clients, the per client AUM, and also want to have more a view on the conversion rate of -- from the app user to paying clients, is there any difference we are seeing in Japan right now compared to other international markets at a similar stage? So wondering if management could give more color on that. And second question is regarding the -- into 2Q, we're seeing pretty strong rebound in the China-related assets in Hong Kong and -- in Hong Kong and the US as well. So wonder what's the help we are seeing right now in terms of client trading activity and firm inflows in the second quarter so far you're seeing. Thank you.

Thank you, Chiyao. I'll let my colleagues, Daniel to answer your first question, and I will address your second question sequentially. Thank you.

[Foreign Language] Let me translate for myself. So, for in Japan, we are seeing very meaningful growth in terms of new paying clients. We saw strong sequential growth in the first quarter and second quarter quarter-to-date, we observed similar strong Q-on-Q momentum. And in terms of client AUM, I think we are still in the early innings of attracting client assets, but we have seen across client cohorts that they continue to put assets onto our platform. And in terms of conversion from users to paying clients, that conversion ratio has improved quarter-over-quarter, thanks to a better account opening process and with more financial products rolled out on our platform. But there were still a significant gap in comparison to other overseas markets, whether it's current percentages or when they were first -- when we first launched into that market, I think it's more of the reason because of the account opening friction and the product, and the lack of comprehensive financial products. And as Leaf mentioned in his opening remarks, we have a very rich product pipeline coming up in Japan in the coming quarters. Thank you.

[Foreign Language] Let me translate for myself. Number one is, we -- definitely, we see a very strong momentum recovery in Hong Kong markets, which significantly help our clients' asset inflows in Hong Kong, and overall in terms of trading volume, trading velocity, et cetera. As Leaf mentioned in the opening remarks, in the first quarter, in terms of the trading volume breakdowns, the US stock trading accounts for roughly over 75% of our total trading volume and we do expect this ratio will become more healthy given more contributions in Hong Kong stock in the second quarters. And number two is, in the first quarter, we recorded very strong net asset inflows, which roughly over HKD35 billion, thanks to a very strong inflow from our existing markets in Hong Kong and in Singapore, et cetera, also incremental contributions from new markets such as Malaysia and Japan, et cetera. And we do believe such momentum remains in the second quarter to date. This will significantly help in terms of the client assets and the trading volume, et cetera. And thirdly, despite we already achieved over 170 fund accounts in the first quarter, partially due to some special reasons in Malaysia due to our brand opening in the first quarter. But we do think the overall momentum on absolute terms remain very strong despite we expect there can be some Q-over-Q decrease due to a very high base in the first quarter. Thank you.

[Operator Instructions] Our next question comes from the line of Katherine Lei from JPMorgan. Please ask your question, Katherine.

Hi, can you hear me clearly?

Yes.

[Foreign Language] I will translate for myself. The first is about the Malaysia market. I would appreciate if management can give us some color on the Malaysia market, like, I heard that clients are very active in trading, like is that one-off or event-driven or is that a persisting trend? The second question will be more on the commission rates. Do you think that we will see some sequential improvement in the sequential rate? How should we form our expectation? Thank you.

Hello, thank you, Katherine. [Foreign Language] Let me translate for myself for the second question first. I think the blended commission rate decrease was mainly due to our pricing model in the US stock market as we mentioned before. And the quarter-to-date, we have seen the ratio has already become more stable, partially due to there were some high-value stock such as NVIDIA et cetera in the US where conductor stock split. So, this will alleviate the pricing pressure that's in -- in the US. [Foreign Language] In terms of unit economics in Malaysia, so far, on a cohort basis, we have witnessed a very healthy organic growth in terms of asset inflow than clients' trading velocity and also the trading volume, et cetera. It seems that all these metrics in Malaysia is well above the average situations of our overall overseas markets. Of course, it is maybe still too early to say, given that we just entered into Malaysia a couple of months ago. We will still keep closely monitoring. But having said that, we think the user behavior demonstrated so far is not just one -- because of some one-off events. Thank you.

[Foreign Language] So we officially launched our brokerage business in Malaysia by the end of February, and we've experienced very rapid growth. So in the first quarter, Malaysia contributed about one-third of our net new paying clients. And within 49 days of official brokerage business launch, we achieved number one in total cumulative downloads in Malaysia. And I think the reason why we can grow so quickly in Malaysia can be attributed to several factors. First of all, we were already the biggest online broker in Singapore when we entered in Malaysia and that brought us a lot of brand recognition. And secondly, we simply offer the best product in Malaysia, one stop platform where you can invest in Malaysia equities, US equities and we have free market data and information, which are all industry-leading. And last but not least, we have also accumulative -- accumulated a large number of users before our official brokerage business launch, and we were able to convert a very meaningful chunk of those users. I think the first quarter growth was above our expectations. But going to the second quarter, we believe the contribution of Malaysia will come down sequentially. I think that is because there is still room for improvement in terms of the level of automation in client account opening, asset inflow and outflow in operations, etcetera. So in order to ensure that our clients then have a very smooth experience, and to increase our operational efficiency, I think we dynamically adjust our client acquisition pace, and so as to better inform our growth in Malaysia. And in terms of our client profile, most of our clients in Malaysia are male, and have higher income. And in terms of ethnicity, a lot of them are the Chinese population. I think that partly explains the high trading turnover and relatively higher average asset than we expected, which will probably lead to a favorable payback period in Malaysia. Thank you.

[Operator Instructions] Alright, I'm showing no further questions. I'll now turn the conference back to Mr. Daniel Yuan for closing comments.

That concludes our call today. On behalf of Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you, and goodbye.

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect.