Yahoo Finance on 19 June 2020 reported the following:
China’s $3.5 Trillion Wealth Product Market Suffers
Losses
Bloomberg Bloomberg News,Bloomberg 8 hours ago
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(Bloomberg) -- Chinese investors and savers just experienced
something that’s never happened before: losses on some of their 25 trillion
yuan ($3.5 trillion) state bank issued high-yield wealth management products.
Those came as the worst Chinese bond rout in a decade
colluded with a push by regulators to transform the nation’s wealth market.
They are doing away with products that offer guaranteed returns to tamp down on
a key source of leverage and risk at the nation’s lenders.
As traders cut bets on the potential for more stimulus from
the central bank, government bond yields soared this month, driving the net
asset value on more than 280 low-risk, bond-linked WMPs, or about 3% of the
market, below the initial 1 yuan value, according to Chinawealth.com, an
official site tracking the industry.
That left many retail investors with accounts flashing red
for the first time, and some flocked online to demand explanations and to be
made whole. On one consumer-protection website, hundreds of angry investors
blasted their banks for the unexpected losses and opaque marketing. Previously,
in the guaranteed return era, the banks would have absorbed any losses.
Tena Yu, who’s been enjoying returns of more than 4% a year
on her 1 million yuan in savings over the past five years, was taken aback when
she saw losses on several her accounts. “I’ve never seen my WMP investments
fall below the initial capital I put in,”
said Yu, a manager at a commercial real estate firm in Shanghai. Among her
investments, the worst performer is a China Merchants Bank Co. product, which
has lost 3% so far.
Yu’s consternation comes after a multi-year campaign by
regulators to instill more discipline in its wealth market as economic growth
slows and the nation opens its financial market to foreign competition. Banks
have been forced to ditch a fixed-return model and move toward offering savings
products that matches up more with the international mutual fund industry,
where investors bear the risk of fluctuating markets and can track the
net-asset value of their funds on a daily basis.
While the potential losses in most
cases is less than 1%, they could undermine depositors’ confidence in the
already fragile banking system. It may also curb inflows into wealth products
-- the biggest source of financing for risky borrower that has been targeted by
regulators in recent years for its poor disclosure, maturity mismatch and a
worsening moral hazard.
“As WMPs shift to NAV-based models,
the likelihood of investors seeing more frequent and bigger losses is
increasing,” said Jin Qi, president of the Bank of Communication Co.’s wealth
management unit. “But this is a necessary part of China’s market transformation
and investors must learn to take their fair share of risks.”
WMPs that have their NAVs disclosed
reached 12.5 trillion yuan in first quarter, more than half of the total,
according to Chengdu-based research firm PY Standard. That compared with 15%
before the rules kicked in. Regulators will require 100% compliance on new
issuance when a grace period expires at the end of this year.
They are most popular
with retail investors, who hold nearly 90% of outstanding WMPs. While policy
makers have been trying to crack down since 2017, demand has held steady as
investors sought out their relative safety amid shaky stock markets and a
slowing economy. Sinking interest rates have also created arbitrage for some
companies, which are issuing debt at lower rates and using the proceeds to snap
up WMPs.
Conditioning Chinese investors to face losses could help
better pave the way for the likes of Blackrock Inc. and Vanguard Group Inc.,
who are now moving in to capture a slice of some $30 trillion in Chinese wealth
assets. Guo Shuqing, Chairman of the China Banking and Insurance Regulatory
Commission, said on Thursday the regulator will allow establishment of more
foreign-controlled wealth managers and encourage local players to invest more
in equities.
The recent dislocation in the market has so far had limited
impact, with the pace of WMP issuance holding steady. During the first ten days
of June, Bocom’s wealth management unit sold about 10 billion yuan in new
products, putting it on pace to reach the 30 billion to 40 billion yuan of
products sold in the previous months, according to Jin.
China Merchants Bank, one of the largest WMP issuers, also
said its new issuance has not been impacted by the recent price decline in some
NAV products. Industrial & Commercial Bank of China Ltd., Shanghai Pudong
Development Bank Co. and China Guangfa Bank Co. all declined to comment.
For Yu, in a world clouded in
uncertainty and volatile stocks markets, the best defense now is to stay put.
“I plan to hold my investment,” she
said. “There’s just no better option right now.”
Translation
（彭博社）-中國投資者和儲戶剛剛經歷了從未有過的事情：國有銀行發行的25萬億元人民幣（合3.5萬億美元）的高收益財富管理產品(WMP)中有一部分受到損失。
這些事件是十年來最糟糕的中國國債狂潮同時遇到監管機構也試圖推動國家財富市場轉型。監管機構正在淘汰提供可保證回報的產品，以壓制主要槓桿來源和國貸方的風險。
由於交易員減少了對央行可能採取的更多刺激措施的押注，本月政府債券收益率飆升。根據追踪該行業的官方網站Chinawealth.com稱，這樣把約佔淨資產值市場的3％的280多種低風險，及與債券掛鉤財富管理產品 (WMP) 的淨資產值推回其最初的1元人民幣價值的低位。
這使許多散戶投資者的帳戶第一次閃出負數，一些人湧向互聯網，要求解釋並獲得還原數目。在一個保護消費者的網站上，數百名憤怒的投資者抨擊銀行引起意外損失和不透明營銷。以前，在保證回報時代，銀行將承擔任何損失。
在過去五年中，宇泰納
(Tena Yu) 的100萬元人民幣儲蓄每年都給她帶來超過4％的回報, 當她看到自己的多個帳戶都出現了虧損, 感到震驚。她是上海一家商業房地產公司的經理, 她說 “我從未見過我的WMP投資低於我投入的初始資金” 。在她的投資中，表現最差的是招商銀行（China
Merchants Bank Co.）的產品，該產品迄今為止已下跌3％。
隨著經濟增長放緩，監管機構進行了為期數年的推廣運動向財富市場注入更多管理紀律，以及國家將對外國競爭對手開放其金融市場,
這都令宇泰納感到震驚。銀行被迫放提供棄固定收益的模式，轉向提供與國際共同基金(international
mutual fund)行業更吻合的儲蓄產品，在該儲蓄產品中，投資者承擔著波動市場的風險，並且可以每天追踪其基金的資產淨值。
儘管在大多數情況下潛在損失不到1％，但它們可能破壞儲蓄戶對已經脆弱的銀行體系的信心。它還可能窒礙流入財富產品的資金。財富產品是高風險借款人的最大融資來源，但因近年來由於披露不妥善，兌現期限不配合，以及道德風險日益惡化而成為監管機構的目標。
交通銀行財富管理部門總裁金琦表示：“隨著理財產品轉向基於資產淨值的模式(NAV-based
models)，投資者看到更頻密和更大損失的可能性正在增加。” “但這是中國市場轉型的必要組成部分，投資者必須學會他們需要分擔風險。”
根據在成都的研究公司PY
Standard的數據，在第一季度理財產品中有披露其淨資產值的達到12.5萬億元，佔總數的一半以上。相比之下，實施該規則之前只有15％。當寬限期在今年年底到期時，監管機構將要求100％遵守新發行規定。
它們受到散戶投資者的歡迎，散戶投資者持有近90％的優秀WMP。自2017年以來，決策者一直在努力去鎮壓它，但由於股市動盪和經濟放緩，投資者需尋求相對的安全，固需求一直保持穩定。利率下調也為一些公司制造了套利機會，這些公司正在以較低的利率發債，並利用收益來搶購理財產品。
去令中國投資者適應面對虧損是有助黑石集團 (Blackrock Inc.)和先鋒集團(Vanguard
Group Inc.)等公司的進軍更好地舖平道路，後者正在進軍中國，以獲取約30萬億美元的中國財富資產的一部分。中國銀行業和保險監督管理委員會主席郭樹清週四表示，監管機構將允許設立更多外資控制的財富管理公司，並鼓勵本地公司投資更多在股票。
迄今為止，最近的市場失衡的影響是有限，因WMP發行速度保持穩定。據郭樹清說，在6月的前十天裡，交通銀行的財富管理部門售出了約100億元人民幣的新產品，使其回到前幾個月內售出300億至400億元人民幣的產品的售出步伐。
最大的WMP發行商之一的招商銀行也表示，其新發行並未受到近期某些資產淨值價格(NAV)下跌的影響。中國工商銀行股份有限公司，上海浦東發展銀行股份有限公司和中國廣發銀行股份有限公司均拒絕置評。
對於宇泰納來說，在一個充滿不確定性和動蕩的股票市場世界中，目前最好的防禦方法是保持現狀。
她說：“我計劃繼續持有我的投資。”
“目前沒有更好的選擇。”
So, it
seems that China is prepared to open up its financial market. Probably the
financial institutions in the US would be interested in entering into the money market brave new world in China. The present uncertain WMP market situation inside China is in line with a news report made by Yahoo Finance on 18 January 2020
entitled “U.S. Firms Could Win Lucrative Job of Cleaning Up China's Bad Debt”.
It was covered in my blog on 10th February 2020 and translated into
Chinese.
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