Yields of wealth management products slip broadly in January, report says

Tracy Li
China's wealth management market saw a broad-based retreat of the annualized rate of return in January, ranging from banks' wealth management products to money market funds.
Tracy Li

China’s wealth management market saw a broad-based retreat of the annualized rate of return in January, ranging from banks’ wealth management products to money market funds, a new industry report said.

In January, the average annual return rate of wealth management products (WMPs) offered by commercial lenders stood at 4.30 percent, down by four basis points from December, data from PYStandard showed.

Structural products, net worth WMPs and those in foreign currencies were not included in the calculation, said the Chengdu-based service provider for the asset management sector.

On average, wealth management plans issued by trust companies saw their yields drop by one basis point month on month to stay at around 8.73 percent, and the comprehensive return rate throughout the online loan industry came down 3 basis points to 9.3 percent from December to January, the report noted.

Meanwhile, money market funds registered a 55 basis points decline, with seven-day annualized returns hitting a new low of 2.88 percent after experiencing a surge at the end of 2018.

For example, seven-day yield of Tianhong Yu’E Bao, the world’s largest money market mutual fund launched in 2013, is currently just 2.515 percent, but the return once surged to a record high of 6.763 percent in early of January, 2014.

More than 400 domestic banks issued a total of 10,478 WMPs in January, and the number of products available to investors increased by about 16 percent within a month. In contrast, the trust sector offered 141 fewer wealth management plans than the previous month, with 61 trust companies issuing 1,426 collective trust products.

The number of money market products remained largely stable during the past month but the online peer-to-peer lending industry saw 1,016 players remain in operation as of the end of January, 17 fewer than December.

PYStandard warned investors to remain cautious of the potential risks plaguing the wealth management sector, as the Chinese government has tightened regulations and fined wrongdoers.

In response to the regulatory changes, Ant Financial Services Group shrank the scale of Yu’E Bao. Data shows that the fund’s assets under management had fallen to US$168 billion by the end of December, from a peak of US$250 billion in March.

Last month, 12 more troubled P2P lending platforms emerged, with one of them reporting difficulties for cash withdrawals, one involved in investigations for committing economic crimes, and another three making claims for repayment delays, the study added.

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