Investor demand for China’s wealth management product still muted

Balance may grow in 2024, according to Fitch Ratings.

Investor appetite for China’s wealth management products (WMPs) remained muted in 2023.

China’s WMP balance stood at CNY26.8t (approximately US$3.72t) as of end-2023, a decline of 3% from a year ago, according to Fitch Ratings.

Whilst WMP balance grew by 6% in H2 compared to H1, this was more the result of the stabilisation in domestic bond prices and net asset values, which eased redemption pressures in the last six months of the year.

“Investor appetite for WMPs has remained cautious in recent years, with increased allocation towards more liquid assets. This, together with tepid home purchase demand and consumer sentiment, drove retail deposit and term deposit growth higher in 2023 despite reductions in deposit rates,” Fitch Ratings said.

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Fitch says that WMP yields have shown signs of recovery since H2 2024. If sustained, this could lead to modest growth in the WMP balance in 2024.

Investment in non-standard assets declined to 6% of total outstanding WMPs in end-2023, from 7% in 2022. 

(US$1 = CNY7.19; as of 13 March 2024)