On May 26, Futu Holdings rose 6.19% overnight, trading at $93.69/share with trading volume of $14.32 million. The stock rebounded from last week's steep sell-off following the China Securities Regulatory Commission's record penalty.

The rebound appears driven by Morgan Stanley reiterating Futu as a Top Pick, stating that the regulatory overhang has been priced in, the fine's impact is manageable, and the company's business focus is shifting toward overseas markets. On May 22, CSRC imposed a proposed penalty of approximately RMB 1.85 billion (approximately $271 million) on Futu entities for conducting unauthorized securities, fund distribution, and futures businesses in mainland China without required licenses. The stock had plunged 27.5% that day, wiping out roughly $4.76 billion in market value.

Futu disclosed that mainland China funded accounts represented only 13% of total funded accounts as of Q1, down significantly from prior years. The company emphasized its international expansion continues with steady growth in overseas funded accounts, and pledged full compliance with regulatory requirements during the two-year remediation period.

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