On Wednesday, Tiger Brokers
The Beijing-based Tiger Brokers, officially named Up Fintech, is an online trading platform. Founded in 2014, Tiger Brokers allows Chinese citizens all over the world to trade stocks listed on the US, Chinese, and Hong Kong stock markets. It offers 4 times margin leverage, commissions of $2.99 per order, and no minimum deposits. Its founder, Wu Tianhu, is the largest shareholder, with a 18.9% stake. Smartphone firm Xiaomi
As real estate markets - China's traditional investment avenue - have cooled, more investors find the Chinese and global stock markets exciting. Tiger Brokers and Hong Kong-based securities brokerage Futu
While China has long been considered a growing emerging market, there are also risks in investing in new tickers like TIGR and FHL. First, business in China is quite opaque, with numerous recent reports of Chinese firms using shady accounting practices that border on fraud. Second, stock trading is largely a zero-sum game, and new traders can easily blow up their accounts from a few bad decisions. The ease of margin and online access can encourage risky overtrading. Finally, Tiger Brokers' growth plan depends on a robust domestic market. Real growth concerns in global emerging markets like China could lead to weak consumer demand and even a recession. In that case, brokerage customers will likely ditch trading for cost-saving survival activities. Although Tiger Brokers gained nicely in its public debut, long-term investors should be aware of the potential risks.
The author does not hold any positions in any of the securities above.