China’s Bank Wealth Management Products Shrink by $200 Billion
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China’s bank wealth management products (WMPs) shrank by 1.38 trillion yuan ($200 billion) in the first quarter, as banks prioritized deposit growth and market volatility weighed on flows.
Bank WMP balances fell to 31.91 trillion yuan at the end of March from the end of last year, according to data from China Wealth (Asset) Management Registry and Custody Co. Ltd., though still up 9.5% from a year earlier. The firm is a state-owned industry registry.
The decline may have been driven in part by seasonal factors, with wealth managers encouraging redemptions around the Lunar New Year to boost deposit figures, said Liao Zhiming, chief fixed-income analyst at Huayuan Securities Co. Ltd.
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- China's bank WMPs shrank 1.38 trillion yuan ($200B) in Q1 to 31.91 trillion yuan end-March, up 9.5% YoY.
- Decline from deposit prioritization, Lunar New Year redemptions, regulatory curbs, stock pullback, bond losses.
- April rebound, but asset allocation challenged by falling yields, deposit rate cuts.
- Huayuan Securities Co. Ltd.
- Liao Zhiming, chief fixed-income analyst at Huayuan Securities Co. Ltd., attributed the Q1 decline in China’s bank WMPs partly to seasonal redemptions around Lunar New Year for deposit growth, plus regulatory curbs on yield rankings, March stock market pullback, and bond fund losses.
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