CCTV.com - CNTV English - CCTV News


Homepage > News > Biz >

Wealth management products' sales increase

08-10-2011 11:19 BJT

BEIJING - Xi Shijia, 28, an IT clerk at a State-owned company in Beijing, said he will not stop buying individual wealth management (IWM) products from commercial banks in the second half to safeguard against asset losses.

The master's graduate from Tsinghua University has been purchasing IWM products since the beginning of the year, especially those that will mature within one month and those with a yield of around 4 percent.

"The gap between deposit interest rates and the inflation rate is too large. That means my deposit will depreciate if I just keep the money in the bank," said Xi, adding that he does not have better investment choices amid a depressed real estate market and a gloomy stock performance.

Sales of IWM products in China rose markedly in the first half after the gap between deposit interest rates and the inflation rate became the widest in three years.

In June, the gap reached 3.15 percentage points.

The People's Bank of China raised the one-year deposit rate by 25 basis points to 3.5 percent in July.

But the consumer price index (CPI), a main gauge of inflation, rose by 6.5 percent year-on-year in July, the National Bureau of Statistics said.

Data from Chengdu-based Fanhua Puyi Investment Management Co Ltd shows that Chinese commercial lenders issued 8,497 IWM products in the first half, worth more than 8.5 trillion yuan ($1.33 billion) in total, exceeding the 7.05 trillion yuan issued during 2010.

These products issued by Chinese commercial lenders usually require a minimum investment of 50,000 yuan, and the capital from buyers often goes into bonds, loans, and company projects.

"Because of much lower deposit rates compared with CPI, a large amount of deposits has flown to off-balance-sheet business such as wealth products to obtain higher returns," said Chen Hui, an analyst at Bohai Securities Co Ltd.

Li Ran, supervisor of the wealth management sector at a Beijing branch of Bank of China Ltd, said first-half sales of wealth products at the branch increased substantially compared with the same period of last year.

"Tightened liquidity trapped many companies in cash flow problems, therefore they are inclined to use equity as a pledge to finance at a comparatively high cost, which provides good investment opportunities for our clients," he said.

As much as 50 percent of the products' outstanding money may go to companies, including developers and local government financing vehicles, instead of into stocks and bonds, Bloomberg quoted Wilson Li, an analyst at Guotai Junan Securities Co as saying.

The rapid growth of banks' wealth management business may increase systemic financial risks and affect the implementation of monetary policies, because common monetary tools cannot directly affect the flow of capital to these products, said Liu Xiaoxin, a professor at Nankai University.

 

Editor:Yang Jie |Source: China Daily

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program