Plenty of business owners and real estate developers – particularly in Los Angeles – are keenly interested in the financial and investing habits of high-net-worth Chinese Americans.
Now, a local bank catering to that group is hoping to shed some light.
Earlier this month, downtown L.A.’s CTBC Bank Corp. USA, a subsidiary of Taiwan’s CTBC Bank Co. Ltd., released a survey of 260 high-net-worth individuals, with half being Chinese Americans and half from other ethnic groups. While the two groups’ answers weren’t wildly different, they did reveal some subtle distinctions in the way Chinese Americans approach building wealth compared with the larger high-net-worth community.
“Chinese Americans treat investing as a goal-oriented activity,” said CTBC Bank Corp. Chief Executive Noor Menai. “To them, there’s no uncertainty on how to build wealth. It’s a science.”
For example, one area where the two groups differ most is in their feelings about the media. Fully 72 percent of Chinese Americans surveyed trust news coverage when making a financial decision, compared with 52 percent of the non-Chinese group.
Also, Chinese Americans have more faith in the opinions of their friends and family than non-Chinese Americans. Twenty-nine percent ranked friends and family as one of their top three sources of information in making investments, compared with 15 percent for the non-Chinese group.
Menai said this fits with their methodical, knowledge-based approach to building wealth. Rather than looking for a hot stock tip from an insider that could help them get rich quick – but most often does not – Menai said Chinese Americans are more interested in learning how the fundamentals of a business work and climbing the ladder slowly. Also, Menai said Chinese Americans feel a responsibility to provide thoughtful, researched advice when asked and aren’t just throwing out hunches.
That seems to dovetail with the fact that Chinese American investors prefer to home in on individual stocks rather than looking for the broad market exposure that many wealthy Americans seem to favor. Forty-four percent of Chinese Americans prefer individual stocks to an index, compared with 27 percent of the non-Chinese population.
The survey also found that Chinese Americans are more optimistic about the future of the U.S. economy than their peers. Only 12 percent of Chinese Americans expect the national economy to weaken over the next year, compared with 18 percent of the non-Chinese group. That doesn’t surprise Menai.
“They’re optimistic because causality works for them,” he said. “They do something and see the results. That differs from some of the economies that they come from, given that they’re not market economies. But here, they see this straight-line connection between effort and reward.”
Cascading South
Seattle investment bank Cascadia Capital has decided to head south, opening its first L.A. office last month.
“We’ve been serving L.A. from Seattle for many years,” said Managing Director Paul Louie, an L.A. native who will run the new outpost. “But our practice has grown to where it warranted us having a full-time presence here.”
The new office is in downtown L.A.’s City National Plaza. Louie said the city center’s renaissance made it an appealing location to set up shop, but being downtown also made sense given the geographic footprint of the firm’s local clients.
Louie is head of the firm’s automotive aftermarket practice, which will also be based out of the L.A. Many of Cascadia’s clients in that sector are located in places such as the Inland Empire and north Orange County.
Cascadia launched its automotive aftermarket practice in 2013 and has done five deals already. But Louie said it was important to have more of a presence in Los Angeles given the density of businesses in that space in the area, and the fact that the industry’s trade association, Specialty Equipment Market Association, is headquartered in Diamond Bar.
He also said Cascadia has been able to gain a foothold doing deals in the industry without facing too much competition thus far.
“It seems to be an underrepresented or underserved industry,” he said.
Louie still feels like there’s plenty of runway – or freeway – left to do deals in the automotive aftermarket space.
“The PE community is very much consolidating this industry,” he said. “There are plenty of opportunities in front of us. It’s a healthy M&A market and there are owners seeing other companies bought by PE firms for pretty good valuations.”
C-Suite News
Mid-Wilshire’s Knight Insurance Group, part of auto-loan billionaire Don Hankey’s Hankey Group, has named David Keum chief financial officer.
Staff reporter Matt Pressberg can be reached at [email protected] or (323) 549-5225, ext. 230.
