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Futu, Tiger Brokers land in ‘nerds vs Wall Street’ battle as social media users take on hedge funds over shares of GameStop, AMC
- Futu will allow trading of GameStop and AMC Entertainment shares on its platforms after wild price swings and upstream restrictions
- Brokers restricting free trading of stocks is ‘market manipulation’, analyst says
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Futu Holdings and Tiger Brokers, the online stockbroking platforms backed by two of China’s largest technology companies, have been caught up in a David-versus-Goliath battle half a world away that pits legions of social network users against some of Wall Street’s most powerful hedge funds.
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The two brokers restricted customers, mostly young traders in mainland China and Hong Kong, from buying new shares of GameStop and AMC Entertainment Holdings on the New York Stock Exchange yesterday.
Shares of GameStop, a Texas-based operator of speciality game stores, quintupled in value this week to a record US$347.51 on Wednesday, before crashing by 44 per cent the next day as US brokerage firms barred traders from joining the fray. AMC, the biggest operator of cinemas in the US, jumped almost 500 per cent this week to a record US$19.90 on Wednesday before tumbling by 56.6 per cent on Thursday.
Futu barred customers from buying shares of GameStop and AMC overnight, allowing only those with existing stock in their portfolio to sell, following the lead by its US-licensed dealers, according to Futu, the Shenzhen-based broker backed by Tencent Holdings.
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The company would resume trading of both stocks on Friday, founder Leaf Li Hua said. Tiger Brokers, which counts smartphone maker Xiaomi Corp as a backer, did not respond to requests for comment.
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