Publicly Offered Bank Wealth Management Products Allowed to Invest in Chinese Stocks

New rules on China’s bank wealth management products (WMP’s) will allow the proceeds from publicly offered instruments to be indirectly invested in the domestic stock market.

The China Banking and Insurance Regulatory Commission (CBIRC) issued the “Commercial Bank Wealth Management Operation Supervisory Administrative Measures” (商业银行理财业务监督管理办法) on 28 September.

The measures serve as a supplement to the asset management regulations issued earlier this year, as part of efforts by Chinese regulators to remove the “implicit guarantees” undergirding WMP’s that created concerns about moral hazard.

According to domestic media reports the new Measures allow the proceeds raised via publicly offered bank WMP’s to be invested in the Chinese stock market.

A CBIRC spokesperson said that existing bank WMP regulations already allow  privately offered WMP’s to directly make direct investments in stocks, yet have until now restricted publicly offered WMP’s to investments in money market funds or bond funds.

The new Measures continue to allow privately offered WMP’s to directly invest in stocks, while easing restrictions on publicly offered WMP’s, and allowing them to indirectly invest in the stock market via various publicly offered funds.

The next step will be to allow the subsidiaries of Chinese banks to issue publicly offered WMP’s for direct or indirect investment in the stock market, with CBIRC currently drafting a “Commercial Bank Wealth Management Subsidiary Administrative Measures” (商业银行理财子公司管理办法) which will serve to accompany the recently issued Measures.

 

Leave a Reply

Your email address will not be published. Required fields are marked *