According to data from Puyi Standard, as of the end of June, the scale of the wealth management market had climbed to 30.97 trillion yuan, increasing by 1.3 trillion yuan in the first half of the year. Against the backdrop of continuously declining deposit interest rates and the one-year fixed deposit rate falling below 1%, wealth management products in the first half of the year formed a significant advantage with an average annualized return rate of 2.65%, attracting wealth to “move”.

In the first half of the year, due to the fluctuations in the prices of underlying assets such as deposits, bonds and stocks, the yields of wealth management products showed a significant divergence. According to data from Puyi Standard, the returns of cash management products have continued to decline, with the average annualized rate of return dropping to 1.54% in the first half of the year. The yields of pure fixed-income and “fixed income plus” products followed the bond market’s trend of “first falling and then rising”, with average annualized yields of 2.98% and 2.71% respectively in the first half of the year. Although the average return of “fixed income plus” products in the first half of the year did not show a significant advantage over pure fixed income products, increasing asset allocation such as equity has become a way for the industry to solve the pressure on product returns.

Financial products

The scale is approaching 31 trillion yuan, but the structural differentiation is intensifying

According to data from Puyi Standard, as of the end of June, the scale of the wealth management market exceeded the 30 trillion yuan mark to 30.97 trillion yuan, an increase of 1.3 trillion yuan compared with the end of last year.

In the first half of the year, the scale of the wealth management market showed a trend of “falling first and then rising”. Data from the Bank Wealth Management Registration Center shows that as of the end of the first quarter, the outstanding scale of the wealth management market was 29.14 trillion yuan, a decrease of 810 billion yuan compared with the end of last year. In the second quarter, with the arrival of a new round of easing policies, the yield advantage of wealth management products over deposits once again became prominent, and funds began to flow back.

In May, after the central bank’s interest rate cut was implemented, the one-year fixed deposit rate of state-owned banks was less than 1%, and the five-year fixed deposit rate also dropped to around 1.3%. According to data from Puyi Standard, the average annualized yield of wealth management products reached 2.65% in the first half of the year, creating a significant interest rate gap with deposit rates, which has driven residents’ savings to shift towards the wealth management market.

Although the total market value increased by over one trillion yuan, the structural differentiation of wealth management products intensified in the first half of the year. According to data from Puyi Standard, the proportion of cash management products has further declined to 22.1%, marking the third consecutive year of decline. The proportion of fixed-income products rose to 75.6%, continuing the upward trend of the past two years.

In the first half of the year, wealth management companies have been increasing their investment in fixed-income products. They issued 14,500 new fixed-income wealth management products, accounting for 93.3% of all newly issued products, an increase of 1.1 percentage points compared with last year. There were 669 new gold management products, accounting for 4.3%, a decrease of 0.9 percentage points compared with last year.

The “decrease and increase” of the two pillar products are closely related to the trends of their respective yields. Cash management products mainly consist of deposits. With the decline in deposit interest rates, according to data from Puyi Standard, the yield of cash management wealth management products has been steadily dropping in the first half of the year, with the average annualized yield falling to 1.54%. On the contrary, fixed-income products mainly invest in bonds, and their returns are affected by both the coupon interest and price fluctuations of the bonds.

In the first half of the year, as interest rates declined, bond prices kept rising, offsetting the impact of the potential decline in interest income. The yields of fixed-income products rose accordingly, with an average annualized yield of 2.79% in the first half of the year. However, at the beginning of the year, affected by the central bank’s tightening of funds and other factors, market interest rates rose and bond prices generally declined. The average annualized yield of fixed-income products once dropped below 2% in the first two months of this year.