The trend of "depositization" of wealth management has been strengthened, and we should be wary of fluctuations in the net value of products

In an environment where high-yield products are hard to find, the volume of new 2 trillion yuan in the wealth management market in a single month has attracted attention. From a further point of view, behind it is the influx of deposits from banks into the wealth management market after the suspension of "manual interest supplement". However, the net value of the wealth management market has fluctuated recently, and the difficulty of finding high returns on the underlying assets has intensified the pressure on the performance of wealth management sub-products. Industry insiders believe that the problem of whether the lack of interest supplement will cause fluctuations in the net value of the product is worth paying attention to, and the negative feedback overshoot stage caused by the behavior of institutions in the downward trend of the financial quotation rate is vigilant.

The pressure to meet the performance standards is highlighted

After the suspension of the "manual interest supplement", bank deposits poured into the wealth management market, driving the growth of wealth management scale by about 2 trillion yuan in April. According to the data of the third-party institution Puyi Standard, as of the end of April, the total scale of the two types of wealth management products was 8.57 trillion yuan and 19.22 trillion yuan, an increase of 0.91 trillion yuan and 1.54 trillion yuan respectively from the end of last month.

From the perspective of the scale of existence, cash management and fixed income wealth management products also account for the "majority" of the whole wealth management market. According to the data, the total scale of the two types of wealth management products accounted for 97.42% of the total scale of wealth management, with a scale of about 25.82 trillion yuan and 8.54 trillion yuan respectively, an increase of 0.73 percentage points from the end of last month.

The increase in cash allocation of wealth management products and the rising sentiment of bank deposit assets are regarded by industry insiders as the strengthening of the "deposit" trend of wealth management funds, the overall risk appetite of residents remains low, and the continuous reduction of personal deposit interest rates is regarded as the reason behind it. Liu Fengming, a researcher at Puyi Standard, believes that the trend of "depositization" of wealth management products has increased, reflecting that residents prefer wealth management products with lower risk levels and more stable income characteristics, which is closely related to the current capital market environment. That is, the volatility of the domestic stock and bond market has intensified investors' cautious sentiment, and wealth management products have begun to allocate more cash and bank deposit assets in order to meet investors' needs for low-risk and stable returns.

However, even though the cash management and fixed income wealth management products have undertaken the return of deposits and achieved high growth in scale, the performance of the two types of wealth management products has been "loosened", failing to continue the requirements of residents to stabilize income. According to the data calculated by the macro market department of Industrial Research Company, in April, the average net value growth rate of cash management wealth management products declined, 0.01 percentage points lower than that in March, to 0.17%, and the average net value growth rate of fixed income wealth management products in the same period was reported at 0.94%, 0.08 percentage points higher than the previous month. In addition, according to the data of Puyi Standard, in April, the average performance of new fixed income and hybrid wealth management products was 3.12% and 3.68%, down 0.06 and up 0.2 percentage points respectively from the previous month.

Whether it is the performance benchmark or the net value growth rate, the performance of cash management wealth management products has declined in April, and this trend has been reflected before. The macro market department of Industrial Research Company pointed out in the report that in the past one month and the past three months, the income performance of weighted products has been better than that of fixed income, and the return rate is ranked as commodities and derivatives> equity> hybrid> fixed income > cash management.

According to Wind data, as of the end of April, the annualized rate of return of cash management wealth management products during the year was only 2.18%, far lower than the annualized rate of return of 3.94% for fixed income products this year, and the annualized returns of equity, commodities and derivatives, and hybrid products were 3.38%, 3.05%, and 2.58% respectively, an increase of 0.03, 0.29, 0.44, 30.09, and 1.08 percentage points respectively from the previous month.

Be wary of the risk of negative feedback

For a long time, wealth management and deposits have been regarded as symbiotic and competitive relationships in the industry, and the two have a "seesaw" effect in terms of scale, and they are the allocation objects to ensure the return on assets of each other. Industry insiders interviewed by reporters believe that under the restriction of "manual interest supplement" in April, the "deposit move" was promoted, and the relevant market was generally worried about the asset undermatch and performance standard pressure of wealth management products.

Wang Ziyu, a fixed income analyst at CICC, pointed out that considering that banks have allocated about 7 trillion yuan of deposits, in the past two years, wealth management has significantly increased the allocation of risk-free deposit assets in order to reduce the fluctuation of net worth.

According to the previous calculation data of the research department of CITIC Securities, the scale of financial allocation related to the co-deposit may be as high as more than 2 trillion, and if the new and old are divided, 2 trillion funds may face reallocation. The agency believes that the wealth management products allocated to deposits are mainly cash wealth management and products with the shortest holding period, so the capital reallocation will not fully match it, and the preferred choice is still other compliant high-interest deposit assets.

"It is expected that the implementation of manual interest supplement supervision will affect the income of wealth management products by about 10bp." Wang Ziyu further explained that part of the allocation of funds to wealth management and funds may also be reallocated back to the bank's non-bank interbank deposits, resulting in an increase in the bank's non-bank deposits; The other part may flow into the bond market, forming the allocation demand for bonds.

According to regulatory statistics, the reporter found that the growth rate of banks' corporate time deposits began to fall from a high level in January, gradually declining from a year-on-year growth rate of 56% at the end of 2023 to 37% at the end of March. Non-bank deposits rose rapidly from 24% at the end of last year, with a year-on-year growth rate of 42% in February, and a high growth rate of 33% in March, although there was a slight decline.

A fund person in East China told reporters that it is expected that two or three percent of the outflow of deposits will be converted into wealth management to form non-bank deposits. According to the data disclosed by China Wealth Management Network, at the end of 2023, the top three types of assets invested by bank wealth management were bonds (including interbank certificates of deposit), cash and bank deposits, and non-standardized creditor's rights assets, accounting for 56.61% (including 11.3% of interbank certificates of deposit), 26.7% and 6.16% respectively, accounting for 89.47% in total. Among them, the proportion of cash and bank deposits increased year by year, increasing by 9.2 percentage points compared with the end of 2022 and 15.3 percentage points compared with the end of 2021, making it the only asset class to grow.

This trend continues. According to the data of Puyi Standard, the total number of bank wealth management products reached 41,200 in January this year, a year-on-year increase of 16.6%, of which cash management products increased by 190.9%, becoming the main source of increment; Hybrid, commodity and financial derivatives decreased by 16.8% and 74.2% year-on-year respectively.

The above-mentioned person told reporters that the enthusiasm of bank wealth management for the allocation of cash and deposits has not diminished, so that the pressure on the performance of wealth management products to meet the standards continues to be highlighted, and it is expected that the future wealth management will continue to reduce the quotation rate, and re-promote residents and enterprises to return to ordinary deposits.

Wang Ziyu expects that under the constraints of bank liquidity indicators and the gradual reduction of high-interest wealth management assets, the ordinary deposit interest rate and the wealth management quotation rate are expected to eventually be linked to each other.

Xiao Jinchuan, an analyst at Huaxi Securities, further pointed out that after the suspension of "manual interest supplementation", non-bank funds will face the problem of whether deposits are usually priced by the amortization method, and whether the lack of interest compensation will cause fluctuations in the net value of the product. From the perspective of the bond market, "if it rises further, it may trigger the redemption of funds by wealth management and banks, thus entering the stage of negative feedback overshoot caused by institutional behavior." ”

(This article is from Yicai)