Fitch: Negative Chinese Yields Dethrone Yu’e Bao
Negative real yields coupled with high-yield short-term wealth management products caused the incumbent money market leader, Yu’e Bao to slip two ranks after a 39 percent nosedive in assets under management.
As of June 2019, Yu’e Bao’s totalled 1.03 trillion yuan ($150 billion) in assets under management, after peaking in March 2018 at 1.69 trillion yuan ($267 billion), according to Fitch Ratings. This places its the Chinese money market fund (MMF) in third place behind the JPMorgan US Government MMF ($147 billion) and the Fidelity Government Cash Reserves Fund ($150 billion).
«Fitch believes that Yu’e Bao is no longer the world’s largest MMF,» said Fitch analyst, Li Huang. «Falling yields have been an important driver in the decline in Chinese MMFs’ asset under management.»
WMP Comeback?
In addition to a weakening yuan, Fitch attributed outflows to lowering yields – inflation-adjusted real yields in April turning negative for the first time since 2013 – which led to a shift in market share to Chinese bank wealth management products (WMP) a popular means of obtaining high, short-term yield domestically.
«We expect further outflows if the real yield remains negative», Fitch added.
According to an «SCMP» report, Ant Financial's Yu’e Bao yielded 2.26 percent compared bank WMPs that were paying up to 3.33 anualized yield (“Zhao Zhao Jin”, sponsored by China Merchant Bank.
