Firm Aims to Be Broker of Choice for China

At the start of the Chinese new year, celebrants greet one another by saying, “Wishing you great prosperity and great wealth.” So perhaps it was appropriate that on the second day of the Year of the Snake last week, Gemstar co-founder Daniel Kwoh officially unveiled the first online brokerage specifically targeting Chinese and Chinese American investors.

ECapitalist.com, Kwoh’s Pasadena-based start-up, allows traders to buy and sell stocks on exchanges in the U.S. and Hong Kong. The company ultimately aims to be the broker of choice for China. But until China’s economy is fully opened to outsiders, ECapitalist.com will target people of Chinese descent living elsewhere in Asia and in North America.

The United States, home to about 2.8 million Chinese Americans, is ECapitalist.com’s first big target market. During two months of beta testing, the company picked up 2,000 accounts in the U.S., along with more than 100 in Hong Kong. Chief Financial Officer Daniel Murray said he expects ECapitalist.com to have 150,000 registered users worldwide, including 90,000 in the U.S., by the end of 2003.

The inspiration for this venture came from Gemstar employee Agnes Lew, who noticed in 1998 that her colleagues in Hong Kong had no easy way to sell their stock options on the U.S. markets, where Gemstar’s shares trade. Kwoh, who had left the consumer technology company a year earlier, persuaded Lew to join him in creating an online trading firm. Lew is now ECapitalist.com’s president.

In Kwoh’s view, people of Chinese descent are an ideal target market. In the U.S., they have the highest rate of computer ownership of any ethnic group and are most likely to conduct financial transactions online, according to Forrester Research. They also are more frequent traders and typically invest more in the stock market, Kwoh said.

Kwoh and other individuals invested $16 million to get the company up and running. ECapitalist.com, which plans to charge $19.95 per trade, hopes to turn a profit by the middle of next year.

Kwoh would like to take ECapitalist.com public at some point.