PBOC Official Calls for Asset Management Sector to Step up Equity Allocations, “Dismantle” Shadow Banking

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Central bank deputy governor Fan Yifei (范一飞) has called for the asset management sector in China to expand its allocations to equity assets in order to expedite the growth of the domestic capital market.

Fan said that in order to expedite the development of a multi-tier capital market, Chinese regulators were encouraging the asset sector to increase allocations to equity assets and other assets, as well as uphold a long-term investment mentality and appropriately increase their assessment cycles.

Fan made the remarks at the “2020 Qingdao China Wealth Forum” (2020青岛·中国财富论坛) on 22 August.

The deputy PBOC governor praised the asset management sector’s efforts to “rectify and dismantle high-risk shadow banking operations, squeeze down the scale and share of asset management products deriving funds for the same sector; increase the issuance of long maturity net-value products, reduce the level of maturity mismatches and overall leverage, and markedly reduce the phenomenons of cash speculating in cash, and funds circulating pointlessly.”

“Risk has been effectively controlled and is gradually dispersing, and the scope of shadow banking has fallen 16 trillion from its historic high…interbank wealth management has fallen nearly 90% compared to its peak period.”

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