Returns on Chinese Bank Wealth Management Products Drop to 39 Month Low in February

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Returns on wealth management products (WMP’s) offered by Chinese banks have plunged to a more than three-year low as the economy continues to weather the impacts of the coronavirus outbreak.

Data from Rong360 indicates that in the month of February 2020 the average yield for renminbi non-structured WMP’s in China was 3.98%, for a drop of 2 basis points compared to the preceding month.

The February reading marks the lowest return for WMP’s in 39 months, since yields plunged beneath the 4% threshold for the first time in December 2016.

The average return on municipal commercial bank WMP’s was 4.11% in February, while for joint-stock banks the figure was 3.98% and for rural commercial bank WMP’s it was 3.97%.

For foreign invested banks the average WMP yield was 3.96%, and for big state-owned banks the yield was 3.79%.

Returns on bank WMP’s have fallen steadily since March 2018, in response to the unveiling of asset management regulations by Beijing which removed the “implicit guarantees” on returns.

Rong360 analyst Liu Yinping (刘银平), Rong360 said that in addition to the acceleration of monetary loosening as a result of the coronavirus outbreak, since February the Chinese central bank’s open market operations had led to declines in reverse repo rates, medium-term lending facility rates and the loan prime rate.

According to Liu liquidity will remain loose for a comparatively long period into the future, and yields on bank WMP’s will continue to decline.

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