On January 27, Eastern Time, the U.S. stock market experienced a broad upward trend amid volatility, propelled by a rebound in technology stocks and renewed expectations for Federal Reserve interest rate cuts. The Nasdaq Composite Index closed up 0.91%, while the Dow Jones Industrial Average rose 0.83%. Against this backdrop, Lufax Holding Ltd (LU.US) saw a notable price movement, ultimately closing 1.13% higher at $2.69, with a trading volume reaching $1.9218 million.
Market analysis indicates that this round of share price increase for Lufax primarily stems from an important announcement released by the company earlier that day. The announcement stated that the internal investigation concerning the redemption issues of certain wealth management products has been formally concluded, alongside the disclosure of systematic rectification measures and subsequent compliance arrangements.
This series of actions has effectively eliminated long-standing uncertainties, injecting a strong boost of confidence for investors to rebuild their trust. The announcement revealed that, after a comprehensive review lasting several months by an independent third-party professional institution, it was confirmed that the funds for the disputed wealth management products were ultimately paid out to end individual investors (i.e., retail C-end investors) as per the contract terms.
No instances were found of fund misappropriation, diversion to related parties, or use for non-designated purposes. In other words, market misconceptions such as so-called "fund pools" or "Ponzi scheme operations" have been thoroughly clarified. This conclusion fundamentally rules out major compliance risks and vindicates the company's fundamental operational standing.
In response to specific management oversights identified during the investigation process, Lufax has taken decisive measures. The primary responsible persons in the relevant business lines have voluntarily resigned, and the company has simultaneously initiated a senior management accountability mechanism, while also restructuring key positions in risk management, product review, and information disclosure.
This move not only reflects the company's "zero-tolerance" compliance stance but also signifies a new phase of more prudent and transparent corporate governance. For the market, this conclusion signifies the removal of significant uncertainty. The months-long investigation period had persistently weighed on the stock price, but the clear redemption conclusion and personnel adjustments have convinced investors that the company has proactively and thoroughly resolved the associated risks.
The announcement showed that, starting from the second half of 2024, the company has comprehensively advanced the upgrade of its internal control system. This includes, but is not limited to: introducing an AI-driven real-time transaction monitoring system, restructuring the product准入 evaluation model, establishing an independent audit channel for customer fund segregation, and regularly reporting progress on rectifications to regulatory authorities.
Currently, the relevant mechanisms have been fully integrated into daily operational processes, forming a trinity of "systems + technology + culture" for a closed-loop risk prevention and control system. It is noteworthy that the company also disclosed that the 2024 annual financial report is currently under intense preparation.
Given the complexity of the rectification matters and the rigor of the audit procedures, the company has formally applied for and obtained approval from the New York Stock Exchange to delay the submission of its 2024 annual report. This action complies with SEC and NYSE regulations regarding compliance exemptions under special circumstances, does not affect the company's normal listing status, and highlights its high regard for financial report quality and the completeness of information disclosure.
Lufax's announcement concurrently disclosed operational data for the fourth quarter of 2025, indicating that the company's core business has entered a track of healthy growth: total loan balance was RMB 183.8 billion, down 15.2% year-on-year, but the consumer finance loan balance was RMB 59.6 billion, up 19.0% year-on-year, with its proportion increasing to 32.4%.
The company has completed its transition to a 100% guaranteed business model, focusing on licensed businesses and contextual finance. New loans originated in Q4 2024 amounted to RMB 69.4 billion, a year-on-year increase of 47.6%, while new loans in Q1 2025 were RMB 57.3 billion, up 19.1% year-on-year. Despite facing adjustment pressures, Lufax's core business foundation remains solid.
As a leading small and micro-enterprise financing service platform in China, the company's long-accumulated risk control capabilities and customer base have not been damaged by a single incident. Currently, Lufax's price-to-book (P/B) ratio is only 0.19x, significantly lower than the global fintech peer average.
This valuation level has fully reflected, or even over-reflected, the impact of the previous risk event. With the conclusion of the investigation, the reinforcement of the internal control system, and the clarified path for annual report disclosure, the core negative factors suppressing valuation are accelerating their clearance. As a leading small and micro-enterprise service platform in China, the company has served over 13 million customers.
Amid the dual tailwinds of the industry consolidation reaching its final stages and a stabilizing regulatory environment, its long-term investment value is expected to undergo a systematic reassessment.
Comments