"Recently, some financial products have been withdrawn to a certain extent, mainly due to the adjustment of the bond market, so we can pay more attention to cash management products." Shortly after the May Day holiday, Qin Qing (a pseudonym), a Shenzhen investor, received a message from the bank's customer manager. She saw from the income section of the bank app that before the May Day holiday, there was a small retreat in the net value of a number of financial products. However, the withdrawal range is not high. Two weeks after the festival, the yield has begun to return to the normal range.
"This year, the income of the money I put in financial management is still relatively 'stable', which is more advantageous than medium and short term deposits." Qin Qing told reporters that she recently planned to reorganize the asset allocation and consider increasing the position of low-risk financial products when some of her deposits expire.
It is not uncommon for people to have such ideas as Qin Qing. Although the yield of wealth management products has fluctuated more recently, affected by the reduction of deposit interest rate, more and more investors still choose to transfer their deposits to the wealth management market, and the scale of wealth management products continues to expand.
Industry analysts believe that there is still room for further expansion of the scale of financial management in the future. However, considering that the bond yield has fallen to a low level, the difficulty of obtaining capital gains is increasing, and the return on financial management may fall in the future, and the scale of financial management and bank deposits will reach a new equilibrium.
Fluctuation of financial returns
In the past month, the bond market has staged a roller coaster ride. At the beginning of April, the bond bull market continued to develop due to the reduction of government bond supply and the steady state of capital. The turning point occurred on April 23. With the central bank's statement that "the long-term treasury bond yield will generally operate within a reasonable range", the risk aversion in the bond market rapidly developed, and the yield of major varieties rose significantly. The 30-year treasury bond yield rose more than 10 BP in a week.
Affected by this, the yield of financial products also fluctuates. China Merchants Securities According to the data reported by the bank team, the average semi monthly annualized yield of fixed income financing in the second half of April was 3.0%, 2.6% and 2.0%, respectively, compared with the first half of the month.
During the week from May 13 to May 18, the bond market as a whole went out of the bull steep market, but the growth rate of the net value of wealth management products narrowed compared with the previous week. according to West China Securities According to the research report, in terms of pure debt products, the yield of mid long term debt products in the week was 0.05%, with a decrease of 0.02 pct on a weekly basis; Short term debt represents a range growth of 0.05% in net product value, with a decrease of 0.03 pct on a weekly basis; The yield of mixed partial debt products in the last seven days was 0.08%, with a decrease of 0.02 pct on a weekly basis.
The reporter noted that compared with the previous round, the impact of this round of bond market adjustment on net wealth management is relatively limited in scope and duration, and there is no obvious negative feedback effect. Many interviewed insiders believe that this is mainly related to the current product structure and asset allocation of bank financing.
This year, cash management and fixed income products are the main driving force for the growth of wealth management products. CICC fixed income research data shows that the fastest growth in scale this year is the smallest holding period and non cash management daily opening products, with the scale growth of about 1.41 trillion yuan and 0.56 trillion yuan respectively.
"At the end of April, the biggest fluctuation in the bond market was the bonds with longer maturities. The proportion of the long end of the bank's financial allocation was not large, and the bank mainly held medium and short end bond assets, so there was not much net value withdrawal and merger." A financial subsidiary of a joint-stock bank believed that, in addition to the recovery of redemption in 2022, the bank had preventive operations for the bond market fluctuations, which could be smoothed through trust Closing price valuation and other methods to smooth the yield curve.
The second is asset allocation adjustment. Bank financing generally relies on insurance asset management to nest deposits. As related deposits are disbursed as general deposits in bank liabilities, they can reflect the overall advantage of higher quotations, and high-yield deposits are not affected by market fluctuations.
According to the data of the Banking Wealth Management Registration and Custody Center, by the end of 2023, the cash and bank deposit allocation scale of wealth management products was about 7.76 trillion yuan, accounting for 26.7%, an increase of 9.2 percentage points over the end of 2022. In addition, Wang Haibo, a fixed income research analyst at CICC, estimated that in the first quarter of 2024, the proportion of asset management products and monetary assets of wealth management companies in asset allocation increased. The proportion of asset management products rose by 3 percentage points to 29% month on month, and the proportion of money market products rose by 1 percentage point to 35% month on month.
"We observed that there was no negative feedback effect of products in the industry as a whole." Guosen Securities Kong Xiang, the head of the non bank financial industry, believes that one of the reasons is early preventive redemption. After 2022, financial management will generally increase the allocation of special fund accounts, and replace low liquidity assets such as direct investment credit bonds with the liquidity advantage of fund products. In this case, when considering the pressure on the liability side, some special account products can be redeemed first.
Continuous expansion of scale
Although the bond market fluctuates frequently recently, the scale of wealth management products continues to expand. According to the standard data statistics of Puyi, as of April 30, 2024, the existing scale of bank financial products was 28.42 trillion yuan, an increase of 2.34 trillion yuan month on month. In addition, according to the West China Securities Research Report, since May, financial management has continued the expansion trend of the previous month. From May 5 to May 12, the scale of financial management has increased by 175.7 billion yuan month on month to 29.42 trillion yuan, constantly hitting new highs in the year.
At the same time, data from the People's Bank of China shows that RMB deposits in the first four months of 2024 increased by 7.32 trillion yuan, 3.92 trillion yuan less than 11.24 trillion yuan in the first quarter, which is equivalent to a decrease of nearly 4 trillion yuan in monthly deposits in April.
The effect of wealth management and deposit price comparison is gradually highlighted, and "deposit out of the table" has begun to attract the attention of institutions. "Recently, obvious changes have taken place in the liability side of financial institutions, and deposits have continued to transfer to wealth management, monetary base and debt base." Yang Yewei, chief analyst of fixed income of Guosheng Securities, believes that the above phenomenon is influenced by the call to stop manual interest compensation and a series of administrative policies under the guidance of deposit interest rate. The difference between deposit income and the income of monetary base, debt base and wealth management has increased.
"The optional assets of residents at the investment end have decreased. Under the background of lower deposit interest rates, the cost performance of financial management has become prominent." Wang Haibo also held a similar view. In addition, he believes that since 2024, the bond yield has declined rapidly, making the return of fixed income financial products better, and attracting more funds into financial management under the earning effect.
Does the trend of financial expansion continue? Wang Haibo believes that after the cancellation of "manual interest compensation", enterprise deposits will be transferred to financial management, which is expected to further promote the growth of financial management scale. However, in the medium and long term, some factors that have promoted the stability of financial returns and maintained a relatively high level in the past may gradually weaken, the return of financial management may continue to fall in the future, and the growth of financial management scale may slow down.
Further, Wang Haibo believes that the bond yield has fallen to a low level, and it is becoming more difficult to obtain capital gains. At the same time, investment in bank deposits through insurance asset management is also subject to certain restrictions. In addition, if the interest rate of non bank deposits can be further and significantly adjusted later, it is expected to force financial management to reduce the quoted interest rate, and finally re promote residents and enterprises to re deposit ordinary deposits.
Yang Yewei expects that there is still room for subsequent bank financial expansion. He believes that, structurally, cash and short-term debt products are still the focus of the product, especially the current high margin of safety of short-term asset returns, which is a good alternative to cash management products.
"This will change the position of banks and non bank funds, and affect liquidity stratification and fund prices." Yang Yewei believes that before, banks were often the investors of capital finance, and non banks were the investors of capital finance. Banks played a dominant role in the capital market, and the financing cost of depository financial institutions (DR) was often lower than the financing cost (R) with the participation of non banks, resulting in liquidity stratification. However, if the subsequent non bank funds are more abundant, it may lead to the narrowing or even inversion of the interest margin between R and DR.
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