As­sets un­der man­age­ment of Yu’E Bao reach $210.5b by June

China Daily (Hong Kong) - - BUSINESS - By WU YIYAO in Shang­hai wuyiyao@chi­nadaily.com.cn

Yu’E Bao, one of China’s most pop­u­lar in­ter­net-based funds, had amassed 1.43 tril­lion yuan ($210.5 bil­lion) of as­sets un­der man­age­ment by the end of June, which has al­ready ex­ceeded the size of in­di­vid­ual de­posits at some of China’s largest banks.

Ac­cord­ing to data from Tian­hong As­set Man­age­ment, which runs Yu’E Bao, the as­sets un­der man­age­ment of Yu’E Bao surged some 80 per­cent in the past six months from around 800 bil­lion yuan by the end of De­cem­ber 2016.

The quar­ter-on-quar­ter growth of Yu’E Bao’s as­sets un­der man­age­ment is about 30 per­cent.

An­a­lysts said that the phe­nom­e­non re­flects how ris­ing num­bers of new in­vest­ment tools are at­tract­ing in­di­vid­ual in­vestors and cap­i­tal from con­ven­tional chan­nels, such as banks.

The as­sets un­der man­age­ment of Yu’E Bao has al­ready ex­ceeded the com­bined size of time de­posits and de­mand de­posits of in­di­vid­u­als at China Mer­chants Bank (1.3 tril­lion yuan) and the size of de­mand de­posits of in­di­vid­u­als at ICBC (1.09 bil­lion yuan).

If the in­ter­net-based fund which is de­vel­oped by Alibaba Group keeps quar­terly growth of 30 per­cent, its as­sets un­der man­age­ment are ex­pected to ex­ceed the de­mand de­posits of Bank of China, one of China’s largest lenders, which posted 1.6 tril­lion yuan in in­di­vid­ual de­mand de­posits at the end of 2016.

Ac­cord­ing to a re­search note from Bei­jing-based TX In­vest­ment Con­sult­ing, sea­sonal tight interbank liq­uid­ity has pushed price growth in mon­e­tary mar­kets and boosted the yield of mon­e­tary funds.

The mon­e­tary mar­ket ex­panded at around 25 per­cent in the sec­ond quar­ter of 2017.

“Most of the growth in over­all fund mar­ket comes from growth of mon­e­tary funds. Mon­e­tary funds are a star cat­e­gory among in­vestors,” the re­port said.

Ac­cord­ing to data from the As­set Man­age­ment As­so­ci­a­tion of China, the com­bined size of mon­e­tary funds in China ex­panded from 4.03 tril­lion yuan by the end of March to 5.17 tril­lion yuan, about 28 per­cent quar­ter-on­quar­ter growth.

Av­er­age yield for de­mand de­posit in most of China’s lenders is some­where be­tween 0.3 per­cent and 0.4 per­cent, while the yields for most of mon­e­tary funds are above 4 per­cent.

“It is true that gen­er­ally speak­ing, de­mand de­posits are los­ing their at­trac­tions among in­di­vid­ual in­vestors, par­tic­u­larly in big cities and among young in­vestors who are ex­posed to wide range of op­tions for han­dling idle cash. Funds are seen as of­fer­ing higher in­ter­est rates than typ­i­cal bank sav­ings de­posits. In­vestors need to bear in mind that in­vest­ment funds are also riskier than sav­ings de­posits. Losses may oc­cur,” said Wan Lei, an­a­lyst with Shang­hai Wan Sheng In­vest­ment Con­sul­tancy Ser­vices.

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