At least twenty bank wealth management products (WMP) in China have seen their net values sink beneath their original principal amount.
A report published by 21st Century Business Herald on 10 June indicates that these bank WMP’s include those issued by the wealth management subsidiaries of big state-owned banks and leading commercial lenders including ICBC, China Construction Bank (CCB), China Merchants Bank (CMB), and China CITIC Bank.
Most of the WMP’s whose net values have sunk beneath one are fixed-income instruments that were recently issued. Analysts imputes these losses to the fact that bank WMP’s invest heavily in bonds, and China’s debt markets have undergone a major adjustment since April following a near two-year bull market.
CMB’s “Jiji Kai No. 1” (季季开1号) fixed income WMP was launched on 17 April, and as of 3 June its one-month annualised return was -4.42%, while its net value had fallen below 1 to 0.9997.
The “Jiji Kai No. 2 (季季开2号) fixed income WMP was launched on 13 May, and as of 3 June its one-month annualised return was -0.63%, while its net value had fallen to 0.9996.
ICBC’s “19GS8113” and “19GS8114”, both of which are fixed income closed net-value WMP’s, had seen their net values drop to 0.9772 and 0.9594 respectively as of 8 June, while over 10 of CCB’s WMP’s have seen their net values drop beneath the 1 threshold.
CCP’s “Jianxin Liacai Ronghui Period 2” (建信理财睿鑫) WMP was launched on 14 May, and its latest net value was 0.998669.