Exchange Serves as Chinese Financial and Social Center : Stocks: Irvine-based Hung Foo trading office links investors to Taiwan market. People also gather there to discuss events in Asia.
The Arbor Village Shopping Center in north Irvine is three time zones and 3,000 miles from the financial heart of New York. But tucked in an office here is the Hung Foo Asian Stock Exchange Information Center, where the action can be as frenzied as any on Wall Street.
The Hung Foo exchange offers clients near-instant computer information on the Taiwan Stock Exchange, the world’s busiest. But investors don’t just come to watch. Using fax machines, cellular phones and long-distance telephone lines, they contact brokers in Taipei to trade stocks.
Since January, this office has become a magnet for local Chinese investors, who come to watch its 34 computer screens flash the trading action taking place thousands of miles across the Pacific.
The exchange attracts a broad cross-section of Chinese for two- or three-hour trading sessions six days a week. As Taiwan’s economy has boomed in recent years, many residents of the small island nation--bus drivers, housewives and businessmen--have caught stock-market fever.
One recent Sunday evening, Woo Young, a 39-year-old Taiwanese businessman who lives in Irvine, came to watch the action at the Hung Foo center. “This is one place I know I can meet other Chinese from Taiwan and elsewhere to discuss business and events in Asia,” he said.
David Chen, a 35-year-old Irvine stockbroker, said there is both a social and serious side to the exchange: “It’s fun and, besides, there’s nothing to do between 5 and 8 p.m. anyway. I might as well try to earn some extra money.”
Many Chinese liken the stock market to legal gambling, and it has become so popular that brokers joke that Taiwan’s official acronym, R.O.C.--or the Republic of China--really stands for the “Republic of Casino.” Volume on the Taiwan market regularly surpasses that of the New York Stock Exchange and the Nikkei in Japan.
The Hung Foo exchange is one of three trading centers operated by the Hung Foo Group (Taiwan)--a subsidiary of a Hong Kong-based conglomerate. The parent company has interests in one of Hong Kong’s largest stock brokerages and in property development companies, including one that acquired the Ramada hotel chain in 1989 for $540 million.
The other centers are in Alhambra in the San Gabriel Valley and in Queens, New York, both areas with heavy concentrations of Taiwanese immigrants.
Hung Foo officials established the trading centers after their research showed that most Chinese-American families retain strong economic ties and interests in Asian business.
Joe M. H. Miao, an official of the Hung Foo Group, said membership at the Alhambra and New York operations is in the hundreds and that the operations have turned a profit within six months of opening. The Irvine center, which opened just three months ago, has about 100 members, drawing largely from affluent Taiwanese natives who have settled near the high-tech center of Irvine.
Hung Foo is considering expanding to San Francisco and Vancouver, British Columbia. As part of that expansion, Hung Foo’s parent is negotiating to acquire a West Coast satellite company to enable it to provide a broader range of financial news services to Asians throughout North America.
Hung Foo Group officials say that although many Taiwanese and Hong Kong investors have bought property and businesses in the United States, they mostly stay away from the U.S. stock markets. Miao attributes the lack of interest mostly to these investors being relatively unfamiliar with American companies and market regulations.
But another reason may be that many Chinese find the U.S. stock market too placid for their tastes.
“The stock markets in Taiwan, Hong Kong and other Asian countries fluctuate more than the American stock market, and many Chinese were making more money from trading in those markets than from the salaries they get from their regular jobs,” said Jack Hsu, Hung Foo’s project controller in Irvine.
The monitors list the latest stock market action on the 272 companies traded on the Taipei exchange, beamed in via satellite to the firm. Other monitors provide the latest news from Taipei and the world.
Most of the members of the Hung Foo trading centers are recent Chinese immigrants with strong family and business ties to Taiwan and Hong Kong.
“We estimate that there are about 600,000 overseas Chinese families in California and that at least one or two members of the family travel between California and Asia every few months,” Miao said. “We found that most of these frequent travelers have established businesses at both ends of the Pacific.”
The Hung Foo Group is hoping that the Taiwanese government’s plan to open the stock market to foreign investors will help encourage more second- and third-generation Chinese living in the United States and Canada to invest in Taiwan companies.
“The buying power of Chinese immigrants is tremendous, but tough to calculate because they have a tendency to keep a low profile and avoid discussing financial matters outside the family,” Miao said.
Businesses that serve the overseas Chinese community, such as Hung Foo, are expected to thrive in the next few years as immigration from Hong Kong and Taiwan to the United States increases, said Harold W. Ezell, a Newport Beach lawyer and former Western regional commissioner for the U.S. Immigration and Naturalization Service.
A driving force behind this migration is Britain’s return of Hong Kong to China in 1997, Ezell said. “There is a lot of concern about how that agreement . . . will be implemented and its effect on the future of Taiwan,” he said.
One potential problem for Hung Foo’s plans involves talks between the Pacific Stock Exchange and the Taiwan Stock Exchange to give the San Francisco exchange the exclusive U.S. rights to supply stock market information from Taiwan.
“Our concern is that the Taiwan exchange might take away our license to provide trading information,” Miao said.
But Robert M. Greber, president of the Pacific Stock Exchange, said “there are no plans at this time to bar Asian brokers or companies from providing up-to-the-minute information on the Taiwan Stock Exchange.”
The Hung Foo exchange in Irvine resembles a small movie theater, with rows of comfortable chairs and a wall full of blinking computer monitors. There are several telephones that clients can use to call brokers and a booth where investors with accounts at Hung Foo’s Taipei brokerage fill out trading orders that are executed in minutes. Five clocks--representing the times in Taipei, Tokyo, London, New York and Los Angeles--adorn the wall. A table at the rear of the room has plastic cups and a large hot water dispenser so the traders can drink Chinese tea.
The center is open from 5 to 8 p.m. Sunday through Thursday and from 5 to 7 p.m. on Fridays. The hours correspond with the short trading hours of the Taiwan Stock Exchange. The center charges members between $25 and $75 a month for the right to use the facility.
World’s Busiest Stock Market
Though Taiwan’s population is just 20 million people, its stock market is the world’s busiest. Last year, more than 175 billion shares were traded on the Taiwan Stock Exchange, surpassing in volume on the New York, Tokyo and Hong Kong stock exchanges.
(Figures are for annual trading volume in billions of shares)
Year New York Tokyo Hong Kong Taiwan 1987 47.81 263.61 110.72 76.86 1988 40.87 282.64 118.68 101.35 1989 41.70 222.60 170.82 220.56 1990 39.68 123.10 219.77 232.31 1991 44.54 93.61 158.99 175.94
Sources: Dow Jones & Co., Hong Kong Stock Exchange, Tokyo Stock Exchange, Taiwan Stock Exchange Researched by DALLAS M. JACKSON and CRISTINA LEE / Los Angeles Times
THE VOLATILE TAIWAN STOCK MARKET Compared to the fluctuations of the Taiwan stock market, the Dow index looks relatively placid. Monthly closing figures: TAIWAN STOCK INDEX* Sept. 30, 1986: 947.11
Jan. 31, 1990: 12,054.35
Mar. 26,1992: 4,792.50 DOW JONES INDUSTRIAL AVERAGE**
Sept. 30,1986: 1,767.58
Jan. 31, 1990: 2,590.50
Mar. 26, 1992: 3,267.70
* The Taiwan Stock Index is based on all stocks traded on the exchange. **The Dow Jones Industrial Average is based on 30 actively traded blue-chip stocks, mostly industrial companies. Researched by CRISTINA LEE / Los Angeles Times
Top 10 Companies Taiwan’s largest publicly held companies aren’t well known to most Americans. But some of these companies manufacture products--such as clothing or household electronics gear--that are sold in U.S. stores under different brand names.
Company Business 1991 Sales Kuo Tai Chianshe Construction $5.0 billion Nan Ya Shuochiao Plastics $2.5 billion Chong Kuo Kangtie Steel (goverment-owned) $2.3 billion Taiwan Suochiao Plastics $1.2 billion Ta Tung Tianchi Electronics $1.2 billion Taiwan Chianwei Rayon products $1.16 billion Fu Nong Touchi Investment company $829 million Tong Yi Food Co. Food company $819 million Yuan Tong Fangchi Textiles $818 million Hwa Nong Fangchi Textiles $789 million Sources: Dow Jones & Co., Taiwan Stock Exchange Researched by Cristina Lee/Los Angeles Times
