Not only the major banks are taking aim at China's huge market. San Francisco's smaller UCBH Holdings (UCBH ), owner of United Commercial Bank, which caters to many Chinese Americans, is eyeing a buy in China. UCBH, which already has a branch in Hong Kong, qualifies to own a Chinese bank, having boosted its assets this year to the required $10 billion. UCBH Executive Vice-President Jonathan Downing says China "holds the key to our growth strategy, partly because of our experience and connections with the Chinese community." He sees a huge opportunity in financing trade for small businesses in China. Joe Morford of RBC Capital Markets, who rates UCBH "outperform," says the bank plans to expand its business in China from 2% of total earnings to 20% or more in 5 to 10 years. UCBH stock, now at 17.70, "is our top pick in small caps," based on valuation and strong growth prospects, says James Abbott of Friedman Billings Ramsey.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial