ANALYSIS: A Red Flag For The SpaceX IPO

Shares of online brokerages Futu Holdings (FUTU) and UP Fintech Holding (TIGR) crashed on Friday amid news of a crackdown by the China Securities Regulatory Commission (CSRC) on the companies for operating in Mainland China without a license and enabling customers to conduct cross-border trades. The news sent a chill that hit other Chinese stocks with U.S. listings, including Alibaba (BABA) and JD.com (JD). Tencent (TCEHY) is a major investor in Futu.

A possible explanation for the wider impact of the crackdown on the online brokers came from Claudio Afonso, who tracks the EV space at electric-vehicles.com. He wrote that a meaningful share of demand for Chinese stocks traded on U.S. exchanges, including Nio (NIO), XPeng (XPEV) and Li Ideal (LI), "has historically come from Mainland retail investors using offshore brokers such as Futu and Tiger Brokers."

China Cross-Border Crackdown

The CSRC said it would confiscate illegal profits, impose other penalties and said any existing accounts must be wound down over two years, allowing for sales but no further purchases.

The action, which also targets Hong Kong-based Longbridge Securities, is therefore resulting in fewer buy orders for Chinese stocks.

Chinese regulators first announced the investigation in December 2022, according to Futu securities filings. In response, Futu said it had removed its Futubull app from app stores in Mainland China in May 2023.

In March, Futu said the number of funded brokerage accounts grew 40% to 3.365 million at the end of 2025, led by growth in Hong Kong and Malaysia. Up Fintech, which is based in Singapore and operates the Tiger trading platform, said it saw 15% account growth to 1.254 million in 2025.

On Friday, JPMorgan downgraded Futu to neutral, slashing its price target to 87 from 300, according to The Fly investment news site. The analyst noted that Mainland Chinese clients account for 13% of Futu's clients, 20% of client assets and around 30% of earnings.

Chinese Stocks: Futu, BABA

Futu cratered 26.6% and TIGR 23.5%. Alibaba stock fell 3.5% at open but narrowed its loss to 1.2%. PDD Holdings (PDD) slipped 4.2% and JD 2.4%.

Among Chinese EV stocks, Nio lost 6.9%, Li Ideal 2.1% and XPeng 1.7%.