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Futu Holdings Limited (NASDAQ:FUTU)
Q2 2020 Earnings Call
Aug 13, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, ladies and gentlemen. Welcome to Futu Holdings' Second Quarter 2020 Conference Call. [Operator Instructions] I would now like to turn the call over to your host for today's conference call, Mr. Daniel Yuan, Chief of Staff and Head of IR at Futu. Please go ahead, sir. Thank you.

Jingyu (Daniel) Yuan -- Chief of Staff and Head of Investor Relations

Thanks, operator, and thank you for joining us today to discuss our results for the second quarter of 2020. 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 risks 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 registration statement.

So with that, I would now turn the call over to Leaf. Leaf will make his comments in Chinese, and I will translate.

Leaf Hua Li -- Founder, Chairman, Chief Executive Officer & Chief Executive Officer of the Technology Committee

[Foreign Speech]

Hello everyone. Thank you for joining us today. We are pleased to announce that we continue to achieve exponential growth across our operating and financial metrics in the second quarter of 2020, following a very successful first quarter.

[Foreign Speech]

We achieved the highest paying client growth rate since our IPO in the first quarter of 2019. We added 64,566 paying clients on a net basis in the second quarter, bringing our total number of paying clients to 303,102, up 84% year-on-year. Both our China mainland and Hong Kong paying clients recorded stellar growth. Our China mainland paying clients hit a record high growth rate since the fourth quarter of 2018, while the number of Hong Kong paying clients jumped 125% year-on-year. Notably, organic growth continued to contribute over half of our new paying clients.

[Foreign Speech]

During our fourth quarter 2019 earnings call, we guided for 90,000 paying clients addition in 2020. Six months into 2020, we've already exceeded our full year growth target. We're now lifting our guidance to 280,000 net new paying clients this year, which translates to 141% year-on-year growth in our total number of paying clients.

[Foreign Speech]

Besides total paying clients, we also witnessed robust growth momentum in total client assets and stable client retention. With growth in both paying clients and average assets per client, our total client assets reached HKD142.4 billion, representing a 108% growth on a year-on-year basis and 44% growth on a quarter-over-quarter basis. The past quarter was our sixth consecutive quarter with the churn rate of below or equal to 2%.

[Foreign Speech]

Now to trading volume. Our total trading volume reached a historic high of HKD643.9 billion, up 202% year-on-year. U.S. stock trading volume was HKD429.3 billion, which accounted for 66.7% of our total trading volume. In July, we launched Hong Kong stock futures and MSCI index futures trading. Going forward, we'll continue to enrich our derivatives trading offerings.

[Foreign Speech]

The increase in U.S. listed Chinese companies seeking secondary listing in Hong Kong and the surge of high-profile Hong Kong IPOs act as major tailwinds for us to further grow and engage our paying clients. Our clients' total subscription for JD.com and NetEase's Hong Kong IPOs, both exceeded HKD15 billion. We've also seen our clients develop growing appetite for biotech IPOs, with a total subscription for Peijia Medical and Akeso's IPOs exceeding HKD19 billion and HKD14 billion, respectively.

[Foreign Speech]

Money Plus maintained strong growth in the second quarter and remains our strategic focus. We established new partnerships with eight reputable mutual fund managers, including T. Rowe Price, Franklin Templeton and Amundi. We also started offering our professional investors private equity funds in June, including a real estate fund from Oaktree. Besides expanding fund offerings, we continue to add on new features, including an automatic investment scheme that allows for automatic investments into the same fund at pre-defined time intervals. As of June 30, total client assets in wealth management reached HKD8.6 billion, representing 37% sequential growth. Over 25,000 clients, or over 8% of our total paying clients held mutual fund positions as of quarter end, and we see significant room for further penetration into our client base.

[Foreign Speech]

Our enterprise service continue to scale. We had 104 ESOP plans and 64 IPO and IR clients as of the end of 2Q. Our ESOP service is gaining increasing traction amount industry leaders and TMT, automobile and biotech sectors. Companies like [Indecipherable] and Peijia Medical have all retained us as their ESOP provider.

[Foreign Speech]

As a leading online brokerage and wealth management platform, Futu offers superior technology infrastructure that allows for stable trade execution. Despite a highly volatile stock market due to COVID-19, our service availability rate in the first half of 2020 reached 99.98%. In April, we doubled our throttle rate in Hong Kong from 100 to 200 to process a higher number of concurrent trades.

[Foreign Speech]

I am pleased to share that on August 12, Futu Singapore Limted was granted in-principle approval from the Monetary Authority of Singapore for the Capital Markets Services license application. This marks a milestone of our internationalization, and we'll continue to look for new markets to extend the footprint of our business.

[Foreign Speech]

Next I'd like to invite our CFO, Arthur, to discuss our financial performance.

Arthur Yu Chen -- Chief Financial Officer

Thanks, Leaf and Daniel. In the second quarter, we continued to deliver outstanding financial results. We recorded total revenue of HKD688 million, up 165% year-over-year and 40% Q-on-Q. Our net income was HKD236 million, up 329% year-over-year and 52% [Phonetic] Q-on-Q. Our total revenue structure and the key revenue lines having largely consist with previous quarters. Let me walk you through some key of our financial details for the second quarter.

Brokerage commission and handling charge income was HKD410 million, an increase of 236% from the same period in 2019 and up 37% from Q1. The growth was primarily due to 202% year-over-year growth in our total trading volume. Our blended commission rate went up to 6.4 basis points on the back of increasing penetration of the [Indecipherable] trading in the U.S. market. Also, more client trade low value stock during the quarter in the U.S. market, which led the implied take rate higher. Brokerage income contributed 60% of our total revenue in the quarter.

Interest income was HKD208 million, an increase of 82% year-over-year and 44% Q-on-Q. Margin financing interest income increased on the back of 49% year-over-year growth in daily average margin financing balance. IPO financing interest income increased significantly, thanks to an active Hong Kong IPO market and our clients increasing appetite to subscribe high quality IPOs on margin.

Bank interest income increased due to clients higher idle cash balance. Interest income as a total contributed about 30% of our total revenue. Other income was HKD70 million. The 192% year-over-year growth was primarily due to an increase in IPO financing service charge income and the fund distribution service income from our wealth management business. Other income contributed about 10% of our total revenue.

On the cost side, total cost was HKD154 million, an increase of 141% year-over-year and 31% Q-on-Q. Brokerage commission and handling charge expenses grew 221% year-over-year to HKD77 million, which was mostly in line with our trading volume growth. Interest expenses increased by 111% year-over-year to HKD40 million, mostly in line with our margin financing business and IPO activities in Hong Kong.

Processing and service costs increased by 76% year-over-year to HKD37 million. The rise was primarily due to an increase in the market information and the data fee as well as increase in the short-haul rate. As a result, gross profit increased 172% year-over-year to HKD534 million. Gross margin was 78% versus 75% in the same period last year.

Total operating expenses were HKD264 million, an increase of 82% year-over-year and a 35% Q-on-Q. Among them, R&D expenses was HKD117 million, an increase of 83% from the same period last year and 39% from last quarter. The increase was primarily due to the continuous increase in the R&D headcount as we continue to invest in our technology platform to sustain long-term growth.

Selling and the marketing expenses was HKD96 million, up 129% year-over-year and 48% Q-on-Q as we continued to roll out our marketing and branding activities to attract new paying clients. Our acquisition costs per each new paying client was around the HKD1,500, down 8% Q-on-Q.

G&A expenses were HKD51 million, an increase of 31% year-over-year and 9% Q-on-Q, which is largely in line with our overall growth -- business growth. As a result, our non-GAAP adjusted net income increased by 312% to HKD243 million. The strong bottom line growth was primarily due to significant top line improvement and the proven operating leverage.

That concludes our prepared remarks and we now like to open the call to questions. Operator, please go ahead.

Questions and Answers:

Operator

Certainly. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Weicheng Tang. Please go ahead.

Weicheng Tang -- Goldman Sachs (Asia) L.L.C -- Analyst

Hi, Leaf, Arthur. Yeah, thanks for the introduction. And firstly, congratulate on the very robust earnings in the second quarter. So, I have two questions. One is about the paying clients. We see a salary decline acquisition in second quarter, even better than the historical high in the first quarter, like 40,000, now we have like 55,000 new paying clients. So, can you elaborate more on the drivers of the paying client growth? And how do you see the momentum will continue in the second half of this year?

The second question is more like broader questions. So basically, we see the retail activity, particularly the online retail trading activity has picked up quite a lot across the region like Hong Kong, China, and U.S. And it's a very good like operating environment for Futu, but also we see competition is also rising, we saw Huatai is introducing zero commission package in Hong Kong few months ago, and maybe there are more competitors entering the market. So, I'd like to ask like if you're looking at one to three years horizon, what is your -- what do you think is the biggest opportunity, as well as the biggest challenge for Futu? Thank you.

Arthur Yu Chen -- Chief Financial Officer

Okay, thank you, Weicheng. I think I suggest my colleague, Robin answer your first question and Leaf will answer your second question.

Robin Li Xu -- Senior Vice President

[Foreign Speech]

So there are -- I think there are three major reasons behind our robust paying client growth. The first one being the COVID-19 pandemic has expedited the change of the behavioral patterns of the retail clients, a.k.a, migrating from offline financial institutions to online trading platforms. And besides the increased volatility in the market has attracted a lot of new investors and new capital.

And the second reason being that, Q2 has long been devoted to optimizing our user experience, and have created a very strong network effect and very -- and established raising brand awareness. And in the first two quarters of this year, you can see that organic growth continue to contribute over 50% of our new paying client growth.

And the third reason is that our operating efficiency also continue to improve. The conversion rate from our leads to paying clients also continue to improve. And -- so those are the three main reasons behind our paying client growth. And I think going forward, we think we have a very optimistic view toward our paying client growth. We see very strong paying client contribution from various channels.

As of the end of 2019, I think about 70% of our paying clients were from mainland and 30% from Hong Kong. And by the end of this year, we expect Hong Kong paying clients to contribute to over 40% of our total paying client base. And also, we just got the in-principal approval for our license application in Singapore. So, we think that the U.S. local market and the Singapore market could be our next step for our paying client growth.

Leaf Hua Li -- Founder, Chairman, Chief Executive Officer & Chief Executive Officer of the Technology Committee

[Foreign Speech]

All right. So, there has been a lot of brokers in Hong Kong that offer zero commissions. Huatai is now the first one, and it will certainly not be the last one. And to be honest, we haven't felt much pressure from these players and you can see that our paying client growth has demonstrated stronger growth momentum than ever. So, if you look at the Hong Kong market, there is 800 [Phonetic] stamp duty. So, Futu is now charging 3 bps for Hong Kong stock trading, and we think a further decrease in our trading commission actually bring little incremental value to the reduction of overall trading costs.

And for the long time, Futu have not been the broker that offers the lowest commission rate in the market, but we believe that we're the one that has the strongest overall user experience. So besides charging a commission rate that's significantly lower than industry average, we have the most in-depth market data. We have a very stable trading system that allows for a high-quality trade execution. We have very high quality market news, and a very active social community platform. And these are all very important reasons to attract new customers, and then these all require a long time to establish.

[Foreign Speech]

In terms of our market opportunities, we believe that our target markets still offers tremendous opportunities for growth. And in terms of the trading markets, I believe that the Hong Kong and the U.S. stock markets are still the two most attracted FD markets in the world, and the Hong Kong stock market ranked number one in 2018 and 2019 in terms of the equity amount raised through IPOs.

And we believe as more high quality new economy companies come to list in Hong Kong, that's more China ADRs do their secondary listing in Hong Kong, this will further contribute to the prosperity to the Hong Kong stock market. And at the same time, the U.S. stock market still have some of the most attractive investment targets in the world, and we believe these two markets will continue to attract new capital, and Futu will be able to continue to increase our market share in these two markets.

And in terms of our client base, we believe that the online brokerage business has a very strong network effect, and we're very confident to sustain rapid growth in our total number of clients. And there are over 20 million Chinese nationals with overseas assets, and there are about 2 million retail stock traders in Hong Kong. So, considering Futu only has about 300,000 paying clients, we still think there is a long runway for growth.

And the policies in the Greater Bay Area will further open up our TAM. And besides our two main target markets right now, which is China mainland and Hong Kong, I think we'll continue to expand globally. And our MooMoo app, that's targeting -- mostly targeting the domestic U.S. market, has already attracted a large fan base, and we will continue to optimize our products and increase our influence.

And yesterday, our Singapore entity also got the in-principal approval for a license application from the Monetary Authority of Singapore, and we'll continue to look out for opportunities in Southeast Asia as well. And our [Phonetic] wealth management business, there is certainly a very important strategic focus, and we launched our business for less than a year, and our total client assets is now over HKD8.6 billion. And from the current statistics, we can see that wealth management continues to attract additional assets, and we want to build Futu into a one-stop wealth management platform and to attract clients to put more assets to Futu to manage.

And lastly about our challenges, as our paying clients grows, as trading volumes skyrocketed. And as there is increasing volatility in the market, that poses a lot of pressure on our trading system and also our risk management system. And, we'll continue to ramp up our R&D investment to ensure the stability of our trading system, and to increase our risk management capabilities.

And as our business continues to grow, we'll continue to hire more people. And how to optimize our town structure, how we continue to increase talent with finance background and with international background, and how to retain and incentivize our current talent pool, that's also a very important task for us.

Arthur Yu Chen -- Chief Financial Officer

Hey, Weicheng, does that answer your question?

Operator

Can we move to the next question, sir?

Arthur Yu Chen -- Chief Financial Officer

Yes, please.

Operator

The next question comes from the line of Daphne Poon from Citi. Please go ahead.

Daphne Poon -- Citigroup Global Markets Inc. -- Analyst

First, congratulate on the very strong quarter. So, I have a couple of questions here. First is regarding your client base or the new paying patterns. So, first, would like to ask on the mix between Hong Kong and mainland China clients in terms of the new paying clients in the second quarter. And also looking at your full year guidance on the new paying clients, we see it's 280,000, which is a very strong number. So, just wondering, if you can share some color on the recent two months like July and August client growth so far, like which -- like how you can support this confidence for the full year or second half continue to stream?

And also, one more on the client side is that we see that the conversion rate has been improving. I think you also mentioned earlier that conversion rate on the registered client to paying clients. I'm just wondering whether this is also because of the higher conversion rate you have with the Hong Kong clients versus mainland China, I guess, there still some capital control which may have lower conversion rate. So, yes, just wondering if you can break down the conversion rate for the two markets.

And the next, I'd also like to ask about your trading volume that you'll be positive -- your U.S. market trading volume this quarter which we see -- have seen a very strong growth and much stronger than the Hong Kong market. So, wondering if you can share like what you see as the reason behind driving this strong growth? And also whether this is like more skewed toward the U.S. companies or the Chinese ADRs and whether you think this strength is, I guess, sustainable going forward?

And lastly -- sorry quite a lot of questions. Lastly, just want to check on your thought about the international expansion. We understand you've got -- you mentioned you're expanding into the U.S. and Southeast Asia market, but also want to get your thoughts on the Asia market license? I understand it's not fully opened up yet in terms of the license approval, but I guess like thinking longer term, maybe two, three years or even longer down the road, what's your thoughts about the chance of getting Asia license as well? Thank you.

Arthur Yu Chen -- Chief Financial Officer

Okay. Thank you, Daphne. Let me just answer your first, second, and also the fourth question. I will leave the third question to Robin, and then the final question regarding the Asia market access to my colleague, Leaf.

In terms of the breakdown of new client acquisition for this quarter, China roughly accounts for 53% of the total, and the remaining 47% came from the China. And also in terms of the trading volumes, as you mentioned before, the US trading volume roughly accounts for to two-thirds of our total trading volumes achieved in this quarter.

In terms of the stock trading by all clients, actually I think it will be more screwed to these purely U.S. stocks, such as Tesla, Facebook, and even GE, etc. The overall Chinese ADRs trading volume -- our U.S. trading volume side is roughly about 15%.

And in terms of the trading volume sustainability, I think it's more -- it's because of the high volatilities in the U.S. markets, particularly in the first half of this year. Going forward, I think the proportion of the Hong Kong trading volumes will continue to go up, because we continue to gain the market shares in the Hong Kong market.

Compared with the first quarter, which we achieved a 1.4% cash and warrants strong market shares in Hong Kong, our market share actually continue to increase to 1.6% in the second quarter, and the such momentum actually will continue -- has continued into July and August. Roughly speaking, in July, our market shares in Hong Kong already achieved 2.5%, which I think is -- which will underpin our growth strategies in the Hong Kong market trading volumes.

So, I will let, Robin, answer your second question about the conversion rate going forward, and also what Asia market access, by Leaf. Thank you.

Robin Li Xu -- Senior Vice President

[Foreign Speech]

So, there are three main reasons between -- behind the higher conversion rate from total clients to -- total paying clients. And the first reason is, as you just said, Daphne, there is a higher percentage in contribution from our Hong Kong paying clients, and Hong Kong paying clients typically demonstrate higher conversion rate.

And the second reason, as Robin, just mentioned answering Weicheng's question. So, we see an increasing conversion rate between our leads to our paying clients. So, we've increased our operating efficiency. We've optimized the account opening and the cash deposit processes, so which made it easier for our clients to become our paying clients.

And the third reason is because of the general market volatility and being increase of high quality China ADRs coming back to Hong Kong. So, a lot of our clients want to take advantage of this opportunity to make money, and that also resulted in the higher conversion rate.

Leaf Hua Li -- Founder, Chairman, Chief Executive Officer & Chief Executive Officer of the Technology Committee

[Foreign Speech]

So, we've continued to look out for opportunities in the Asia market. And five years ago, we became the level two market data provider in cooperation with the Shanghai Stock Exchange. And we continue to optimize our market data, our news, our trading offerings for Asia stocks to -- through Stock Connect, and we've also noticed the relative policy updates with regards to the Greater Bay Area. And, at the right time, I think we'll consider getting the Asia license, but it's not on our immediate agenda right now, and there are still a lot of other things that we could do, and we should focus on right now. Thank you.

Daphne Poon -- Citigroup Global Markets Inc. -- Analyst

Thanks. This is very helpful. Just want to follow up on the conversion rate. I wonder if you can share what is the conversion rate for Hong Kong clients versus that of the mainland Chinese clients? And actually just one more quick question if I may, is -- regarding your any potential capital raising, Leaf, as you have been undergoing this very fast business expansion and tapping into like new markets. Yeah, so, I wonder if you can comment on that? Thank you.

Arthur Yu Chen -- Chief Financial Officer

Daphne, can you repeat your second question. I think -- let me just answer your first question first. In terms of conversion rate for the Hong Kong people, because now SSE ask local people to open accounts through the online model. Actually, they need to remit at least HKD10,000 to activate their account. So, essentially the conversion rate of Hong Kong paying clients is almost close to 100%. Then the remaining part in the mainland's people, the conversion rate between registered account -- clients and paying clients is around -- close to 30%.

Daphne Poon -- Citigroup Global Markets Inc. -- Analyst

Okay, got it. Yeah. The second question is just about, any potential capital raising as you continue to expand your business including the margin financing business?

Arthur Yu Chen -- Chief Financial Officer

I think, at the end of the second quarter, if you look at our margin balance, which was around HKD7.5 billion, this amount actually include around 20% of -- 20% of this amount is actually belong to the stock lending, which have no limitations on equity base. If we take out this -- this part out, our margin balance is around HKD6 billion versus our total equities close to HKD3 billion. So, I think the leverage ratio is still well manageable.

Daphne Poon -- Citigroup Global Markets Inc. -- Analyst

Okay, got it. It's very helpful. Thank you.

Arthur Yu Chen -- Chief Financial Officer

Thank you.

Operator

Thank you. We have the next question from the line of Yiran Zhong, from Credit Suisse. Please go ahead.

Yiran Zhong -- Credit Suisse -- Analyst

Hi, thank you for taking my questions. Very -- congratulations on the very strong quarter. Just a follow-up question on the cost side, on the strong paying clients guidance. Would you provide any outlook on the customer acquisition costs, in terms of trends for the second half of this year, and the implication for sales and marketing expenses?

And also a related question, which I think Leaf touched upon earlier. With the strong growth and better market conditions, are you looking to revise your plan to add new staff? If I'm not mistaken, you've previously guided for a 20% year-on-year growth in new staff -- in total number of staffs this year. Are there any new thoughts on this plan? Thank you.

Arthur Yu Chen -- Chief Financial Officer

Okay, thank you. Let me answer your second question first. In terms of headcounts, you're right. We plan to increase more headcount in the second half of the year in line with very strong operating growth in the first half year. As you mentioned before, we guided around the 20% year-over-year headcount growth in the first half. In line of the recent development of our business, we now consider the full year headcount increase compared with last year May [Phonetic] in the range of 35% to 40%.

And in terms of the acquisition cost per each client in the second half year, in the first half year our blended acquisition cost for each new paying client is around -- in the range of HKD1,500 to HKD1,600. We hope such range will remain largely insane in the second half for our new client acquisitions.

Yiran Zhong -- Credit Suisse -- Analyst

Understood. Thank you very much.

Arthur Yu Chen -- Chief Financial Officer

Thank you.

Operator

Can we move to the next question? Yeah. The next question comes from the line of Levi Leu from HSBC. Please go ahead.

Levi Leu -- HSBC -- Analyst

Two questions. The first one is about Hong Kong IPO. So do we have the statistics that how much of our brokerage income and interest income in the second quarter is generated from the Hong Kong IPO? And could you share about the fee mechanism of the IPO? For example, the HKD15 billion subscription from JD and NetEase, how much do you charge them and what is the interest charging duration, and also the rate difference between normal [Phonetic] transactions?

And my second question is about the new function is the PI. So, Professional Investor Services is usually the battlefield of resources in the sales personnels whom providing their high net worth clients with face-to-face or off-site services or customized services. So, what is our strategy to develop the PI business, and how is our business different from the traditional private banks in Hong Kong, in terms of the target customer group and -- fee ratio, and also the product offering? Thank you.

Arthur Yu Chen -- Chief Financial Officer

Okay, thank you. Let me answer the first question and leave the second question to my colleague, Daniel. Just some quick numbers. In terms of the Hong Kong IPOs, in the second half for the brokerage income, roughly 3% of them comes from the Hong Kong IPO subscription and the tradings. And -- we think the interest income roughly 20% contribute from the Hong Kong IPOs.

We charge several different dollars from the Hong Kong IPOs, including the handling fees which is normally HKD50 to HKD100 per person per subscriptions. And also, many investors will pay -- will use the leverage to make the subscription, the relatively interest income will be included in our interest income items. And first the handling charges, which I mentioned it before, will be included in our other income. Then, there will be some rebate, roughly 1% rebate, if their subscription was successful and got the shares from the Company's allocations. This rebate will be included in our trading commission item as well.

Jingyu (Daniel) Yuan -- Chief of Staff and Head of Investor Relations

Hi, Levi. To your second question on our private equity fund offerings. You're definitely right. Most of the private banks in Hong Kong, they very much rely on face-to-face interactions with the professional investors when selling the alternative investment funds. But for Futu, we'll be still relying 100% on our online platform. We will not have client service representatives that reach out to these professional investors and market our products.

And the whole tenet of Futu is to equip our investors with information and tools to make well informed investment decisions, and that philosophy continues to our private equity fund offerings. We'll offer in our platform rich and adequate information about the different private equity funds, and hopefully that's enough information for them to make up their investment decisions.

And so far, it's only been a little over a month since we started offering private equity funds, and we've seen a pretty nice AUM ramp up in this area. So, in terms of our fee and product strategy, so -- I think our fee will still be lower than what most of the private banks charge. So, on average, we plan to charge about 1% subscription fee for our private equity funds. And for our product selections, since most of our clients are still stock trading clients, so we'll focus more on the fixed income fund offerings. And for the equity offerings, we'll focus more on the tech-related hedge funds. Thank you.

Levi Leu -- HSBC -- Analyst

Thank you. It's very clear.

Operator

Thank you. We have our next question from the line of Vincent Cao from Point72. Please go ahead.

Vincent Cao -- Point72 -- Analyst

Thanks for taking my question. I have several questions. The first is a follow-on question on your new paying customer target. You just revised up your full year target to 280,000. So that means, you expect to grow new paying customers by another 170,000 in the second half. Can I get some colors about the run rate in July and August, namely how many new paying customers you already achieved in these two months?

And where were you -- what's the strategy to attract that big number of new customers? It means, what type of customers, mainly from mainland China or from Hong Kong local retailer investors? And will this big number of -- big increasing new customers dilutes the average asset for clients? This is the first question.

And the second question I wanted to ask is about the ADR. The current U.S. and China tension, and U.S. also trying to ask ADR companies to obey their rules to submit all these filings, which can cause some disruption on listing and operations. So, were you thinking about -- also conduct a secondary listing in Hong Kong in the near future? Yeah, that's my two questions. Thank you.

Arthur Yu Chen -- Chief Financial Officer

Okay, thank you for your question. Let me answer your first question, first. In terms of the full-year guidance, you're right. Our full year guidance implies around the 180,000 paying clients in the second half of this year, which means on average each month we should achieve 30,000 new paying clients. We do not disclose monthly paying clients numbers, but I do think based on the current situations we observe in July and early August, the run rate is well on track.

And the second question is regarding the secondary listing in Hong Kong for the ADR back home [Phonetic]. Because we were listed in the U.S. in the first quarter of last year, so seriously speaking, we cannot apply a secondary listing in Hong Kong until the early days of 2022. So, it is still too early for us to make a final assessment. We're still closely monitoring the land -- the politics landscape and also the new policies advocate by the Hong Kong Stock Exchange. So, currently we've no confirmed timetable and no confirmed ideas about secondary listing. Thank you.

Vincent Cao -- Point72 -- Analyst

Okay, thanks. Can I just quickly follow up on the new paying customers. Where do you think you can -- what will be the mix of these new paying customers. I mean, how much percentage will come from Hong Kong, and how much comes from mainland China? And what will you think expected impact on the asset client -- average client asset per new client? Will this cause dilution -- yeah, dilution on your second quarter numbers? Thank you.

Arthur Yu Chen -- Chief Financial Officer

Yeah, understood. I think roughly speaking, we still target 50% from the Hong Kong. The remaining 50% from the mainland. And your concerns about dilution, I think it will -- it mainly depends on the market as well. If the volatility continues, it will further increase the intentions for people to jump in more monies into our platform. That's why we strive to provide a more service offering and also product offering to accelerate more monies from clients banking account.

On a static basis, the balance of the Hong Kong based accounts will be slightly lower, roughly 20% to 25% lower compared with the balance -- average account balance from the mainland accounts.

Vincent Cao -- Point72 -- Analyst

Okay, thank you. Thank you very much.

Arthur Yu Chen -- Chief Financial Officer

Thank you.

Operator

Thank you. I would now like to hand the call back to Mr. Daniel Yuan, for any closing remarks. Thank you.

Jingyu (Daniel) Yuan -- Chief of Staff and Head of Investor Relations

That concludes our call today. On behalf of the 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.

Operator

[Operator Closing Remarks]

Duration: 60 minutes

Call participants:

Jingyu (Daniel) Yuan -- Chief of Staff and Head of Investor Relations

Leaf Hua Li -- Founder, Chairman, Chief Executive Officer & Chief Executive Officer of the Technology Committee

Arthur Yu Chen -- Chief Financial Officer

Robin Li Xu -- Senior Vice President

Weicheng Tang -- Goldman Sachs (Asia) L.L.C -- Analyst

Daphne Poon -- Citigroup Global Markets Inc. -- Analyst

Yiran Zhong -- Credit Suisse -- Analyst

Levi Leu -- HSBC -- Analyst

Vincent Cao -- Point72 -- Analyst

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