Wealth management

A third of China’s listed firms place their trust and cash in lightly regulated wealth products

Eight listed firms have each invested more than 10 billion yuan in accumulating wealth management products this year

PUBLISHED : Thursday, 21 December, 2017, 8:09pm
UPDATED : Thursday, 21 December, 2017, 9:54pm

Roughly a third or 1,126 A-share companies have invested in wealth management products (WMPs), an increase of nearly 30 per cent from a year earlier, with investments of eight listed companies exceeding 10 billion yuan (US$1.5 billion) each, according to data provider Wind.

Shanghai-listed Xinhu Zhongbao, a Zhejiang-based property developer, has the highest accumulated investment worth 24.1 billion yuan in WMPs.

According to Wind, most of Xinhu Zhongbao’s investments are structured deposit products in money market products offered by commercial banks, with maturities between 22 days to six months, and a rate of return ranging between 1.6 to 4.9 per cent.

Shanghai-listed Minmetals Capital, a state-backed manufacturer and distributor of electronic equipment and power supply materials, has bought into eight short-term, structured deposit products this year, worth 13.5 billion yuan.

Shenzhen tech company the latest victim of China’s 100 trillion yuan wealth management market

Kuang-Chi Technologies, a Shenzhen-listed technology company with ambitions of sending tourists into space and developing flying jetpacks, has invested 12 billion yuan into WMPs, ranking sixth among the 3,420 A-share companies.

China has a sprawling wealth management market valued at more than 100 trillion yuan, according to official figures.

But regulating the market has been fraught with issues. Banking, securities and insurance regulators have each set different rules and standards, making it extremely difficult to monitor the vast industry and thereby posing risks to the system.

The People’s Bank of China (PBOC) has drafted guidelines in late November, which aims to bring the market under a single regulatory umbrella for the first time.

The PBOC is soliciting public opinion on the draft rules, but the banks have complained that the rules are too strict and may backfire if interbank liquidity drains too fast because of the tightened rules.