China’s Internet Wealth Management Index Falls for First Time in Five Years, Posts 19% YoY Drop

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A key index covering the performance of the online wealth management sector in China has posted its first decline in half a decade.

The latest “2018 Online Wealth Management Index Report” (2018年互联网理财指数报告) indicates that the internet wealth  management dropped to 563 points for 2018, for a decline of 19% compared to the 2017 reading of 695.

The index previously saw five consecutive years of increase, rising from 100 in 2013 to 148 in 2014, 341 in 2015, and 456 in 2016.

Chinese online wealth management expanded from 215.297 billion yuan in 2013 to 3.15 trillion yuan last year.

The decline arrives despite an expansion in China’s wealth management market from 130 trillion yuan in 2017 to 132 trillion yuan in 2018.

Trusts, brokerage asset management and fund accounts saw declines of 2 trillion yuan, 1.2 trillion yuan and 2.7 trillion yuan respectively, while publicly offered funds, private funds and insurance saw gains of 1.5 trillion yuan, 0.7 trillion yuan and 2.4 trillion yuan respectively, while bank wealth management held steady.

Yin Jianfeng (殷剑峰), vice-chair of the National Institution for Finance and Development and professor at Beijing’s University of International Business and Economics, said to Stcn.com that major assets will see intense volatility as the global trend of declining interest rates comes to an end, an the era of earning “stupid money” has come to an end.

According to Yin institutional investors such as life insurers, funds, aged care funds and bank wealth  management subsidiaries will replace bank wealth management as the mainstream, while China’s household sector will make more allocations to stocks and bonds on capital markets.

“Capital market investment will inevitably replace deposits and real estate, and this type of allocation will increasingly assume the form of ‘indirect financing’ via institutional investors.”

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