Yu’E Bao reduces maximum holding ceiling for individuals

The maximum holding of an individual transaction account in China’s online payment platform under Alipay, Yu’E Bao, is being reduced to 100,000 yuan ($ 15,012.31) from Monday.

It is the second time that the management company, Tianhong Asset Management Co, cut its holding ceiling. In May, the ceiling was reduced to 250,000 yuan from 1 million yuan.

The move is meant to maintain the stable operation of Yu’E Bao, safeguard the fundamental interests of investors and better serve the public, as the fund size is growing fast, the company said in a note posted on its website.

As of June 30, the value of its assets exceeded 1.43 trillion yuan, up from 800 billion yuan as of the end of 2016, a gain of almost 80 percent, the company said.

The change will reduce the operational risks of Internet fi-nance, Shao Yu, a senior analyst at Shanghai- based Orient Securities, told the Global Times, adding that move will prompt individual investors to rethink their holdings and diversify.

The cut reflects the fact that Yu’E Bao’s positioning has changed, and the finance product will put more focus on individuals’ cash management, Cao Lei, director of Hangzhou- based China e- Business Research Center, told the Global Times.

Since a subsidiary of Alibaba, Ant Finance Service Group, has delayed its IPO until 2018 at the earliest, Alibaba will put more emphasis on complying with policies in its overall financial practice, Cao continued. Founder Jack Ma Yun has shifted his strategy from being a competitor of traditional banks to an enabler in the financial ecosystem.

In the past two weeks, Yu’E Bao’s rate of return has fallen below 4 percent.