Shares of the Chinese online brokerage and wealth management company, Futu Holdings Ltd. (FUTU) are up 7.17% in the premarket today; April 4, 2022. Valuing at $37.08 at the last check, FUTU has been bullish since Friday. The prior trading session also reported a green picture with gains crossing 6% at the closing value of $34.60.
Despite being added to the list of equities under consideration for delisting, the stock is flying on presiding hope in the market. On Friday, reports emerged that the Chinese government is considering a new approach to resolving the country’s audit issues with the U.S. This news gave a sigh of relief to Chinese stocks in the U.S. including FUTU.
Chinese Stock’s Misery, a hopeful affair?
Chinese stocks have been beaten down on various fronts recently. A blow from Beijing’s relationship with Kremlin and another from U.S. regulatory requirements. While the fears of China supporting the Russian invasion of Ukraine were subsided due to the country’s support announcement for its economical situation, the audit issue is still ongoing.
U.S. and China had been at an impasse over the regulatory audit requirements for a while. This pushed several U.S-based Chinese stocks towards possible delisting. Recently, five more stocks were added to the list of companies in possible violation of HFCAA (Holding Foreign Companies Accountable Act). These stocks included FUTU among others, which are being evaluated for possible delisting.
The shadow of gloom caused by the news was neutralized by the latest developments announced on Friday. According to South China Morning Post, the Chinese regulatory commission is currently considering a new approach to vetting the audit data from its finance ministry before sending it for review by U.S. auditors. Thus, Chinese stock including FUTU has been gaining on the glimmer of hope.
Where is FUTU Headed?
Even though the company has been having a tough time due to the market situation on top of its missed earnings for 2021, FUTU just might be headed for a better future. If the audit issue is finally resolved as on track, the stock will most definitely be removed from the fearful list.
Moreover, the latest financials while having missed the earnings expectations did show YOY improvement. The total number of paying clients where reached 1.24 million in 2021 (+141% YOY) is expected to grow to 200,000 in 2022.
Conclusion
While the future of FUTU is in its own hands, the troubling woes in the market are finally edging towards a solution. The U.S. and China are leaning towards an agreement on the ongoing audit issue which is clearing the air for FUTU and other Chinese stocks.
