Hong Kong investors are natural gamblers. Their penchant for high risks and fast returns is known the world over. The stock market is full of tips which are pursued by small investors. They turn their nose up at the idea of long-term investment and regard fundamental analysis as irrelevant and too Western. Such 'conventional wisdom' seems to be finding support in empirical evidence: a recent survey done by TD Waterhouse found that 'the typical Asian customer trades primarily in equities, while the non-Asian customer tends to focus on fixed-income and mutual fund products; Asian investors also trade more frequently, and use more margin facilities'. Specifically, the survey of the firm's 4.2 million worldwide customers found that, on average, non-Asian customers traded 27 times a year, while their Asian counterparts traded more than twice as much at 55 times a year - or more than once a week. 'Our experiences have shown that the Asian customers' trading patterns differ from non-Asian trading,' said Karen Buck, managing director of TD Waterhouse (Hong Kong). TD Waterhouse entered the Hong Kong market in 1996. Initially, it provided United States and Canadian trading and added Hong Kong trading in the latter part of last year. Perhaps the questions is whether Chinese are bigger risk takers and more short-term orientated than Westerners. Many agree. ' Very definitely there is a cultural difference,' said Christopher Beale, assistant director and a financial adviser at Towry Law. 'As a general rule of thumb, Asian investors tend to think shorter term and higher risk. Our average risk profile of the clients shows that the local Hong Kong Chinese want to have a lot bigger return over a shorter timeframe and, in order to achieve that, they tend to be more aggressive in their portfolio.' He said there was a joke in the investment society that Americans planned 25 years ahead, Europeans planned 15 years ahead, while Asians planned one year ahead. 'This is very close to reality,' said Mr Beale, who has worked in Hong Kong for seven years. His clients comprise 70 per cent expatriates and 30 per cent local Chinese. Many brokers say the timeframe for buying and selling among Asian investors can be much shorter than a year. Often, investors buy and sell in a week, or even on the same day. Matt Dillon, Asia Pacific regional manager of ED&F Man Investment Products, said there were historical reasons why Asians were out to make a quick buck. He said the experiences of the war years had given them the mentality that danger was always near. 'You notice that Chinese and Vietnamese like to hold assets in the most liquid form, like in gold or jewellery, despite the declining value,' he said. In addition, Asians tended to think that their children would take care of them when they became old and that the best investment they could make was in their children, while Westerners had a sense of insecurity that they had to invest to take care of themselves in the silver years, he said. ED&F Man Investment Products is a company which originated in Europe and specialises in hedge fund products. It clients are mostly from the Middle East, South America, Asia and Europe. People also attribute the low penetration rate of mutual funds to the Chinese tradition that people do not feel comfortable letting others manage their money. 'Money is a private matter. A typical Chinese would not feel at ease discussing it with a financial adviser,' said MF Chan, managing director of Apex Noble, a local financial advisory firm. Mr Beale believed that fast economic growth and stock market euphoria in the past two decades had spoiled the Asian investors, who were used to stock rising by up to 30 per cent in a day. 'Europeans are quite happy with a 7 to 8 per cent of annual return due to the low interest rate, low economic growth environment. But that, according to Hong Kong standards, is not at all acceptable,' he said. But not everyone agrees the differences are cultural. 'It is just human nature to chase quick money,' said Gilbert Chu Kwok-tsu, a Sun Hung Kai research analyst. He said there were many day traders in the United States, a trend which was well known. 'There is nothing inborn in Chinese for gambling,' he said, adding that the differences were more related to economic structure and development. 'People in the United States, in general, have higher education, they tend to hire professionals in dealing with financial matters, are more in tune with investment, and their pension system and tax system are more developed which encourages people to invest long term.' He criticised Hong Kong's big banks which tended to limit the distribution of their fundamental research to their privileged clients and leave small investors short of valuable information that may guide them to invest more sensibly. He believed the new Mandatory Provident Fund system should expand the investment horizon. 'In 20-30 years, you will find Asian investors look a lot more like the Americans, demanding more research information, and have a more long-term perspective.' Mark Mobius, the Templeton Asset Management emerging market guru, also believed that there was no intrinsic difference between the two groups. In fact, he hardly thought that there was any difference in terms of trading patterns or investment behaviour. 'There is no conclusive evidence to indicate that Chinese investors are more risk taking and invest in shorter term than their Western counterparts,' he said. 'Chinese investors invest a lot in property, which is very long term.' He attributed the lack of popularity of mutual funds in Hong Kong to poor marketing and a different tax structure.