The "variation" of financial management of listed companies: the scale has shrunk by more than three percent, and low-risk products are favored

This year, the enthusiasm of listed companies to buy wealth management has gradually cooled down. According to Choice data, in 2023, the scale of entrusted wealth management (including wealth management, structured deposits, large-value certificates of deposit, and asset management plans, the same below) of listed companies will continue to shrink, and some companies will further reduce the scale of entrusted wealth management in 2024. At the same time, the "stability-seeking" mentality of listed companies is significant, and low-risk products such as structured deposits account for more than half of the entrusted wealth management "shopping carts", and continue to rise.

According to the analysis of industry insiders, the "change" of listed companies' attitude towards the wealth management market is mainly related to market fluctuations. On the one hand, with the further deepening of the net-worth transformation, the volatility of the yield of wealth management products has increased; on the other hand, the deposit interest rate has been lowered several times since the beginning of this year, and the attractiveness of listed companies has weakened.

Listed companies seek stability in investment and financial management

Perhaps affected by the scarring effect of last year's wealth management redemption wave, compared with previous years, the pace of "buying, buying, buying" of listed companies in the wealth management market has slowed down this year. According to choice data, as of December 14, a total of 895 companies have issued entrusted financial management announcements in 2023 (including plans, implementation completion, and implementation, the same below), with a subscription scale of about 813.4 billion yuan.

In the same period last year, a total of 1,171 enterprises issued entrusted financial management announcements, with a subscription amount of 1,244.5 billion yuan. In contrast, in 2023, the number and scale of participation of listed companies will drop significantly, of which the scale will drop by more than 30%.

This data is also consistent with the data on the size of the wealth management market this year. According to the "Semi-annual Report on China's Banking Wealth Management Market (2023 First)" released by the Banking Wealth Management Registration and Custody Center, as of the end of June 2023, the scale of the bank wealth management market was 25.34 trillion yuan, a year-on-year decrease of 13.1%. A relevant person from a listed company told reporters that because of a round of losses at the end of 2022, his company will be relatively cautious in investing in wealth management products in 2023, reducing the scale of investment and using funds in other fields.

From the perspective of specific structure, this year, listed companies prefer structured deposits, large-amount certificates of deposit, low-risk wealth management and other products to seek stability, while high-risk investments have frequently stepped on thunder.

According to Choice data, as of December 19, 2023, listed companies have subscribed to a total of 13,827 products, of which 7,827 are structured deposit products, accounting for 56%. Last year, it was 50 percent. This means that at a time when the overall entrusted wealth management scale is shrinking, the proportion of structured deposits is increasing against the trend.

In addition, 1,737 wealth management products were subscribed, accounting for only 12.5%. Among them, most of them are low-risk financial management of R2 and below, and the expected annualized rate of return is mostly concentrated between 2%~3%. Only a small number of listed companies have purchased high-risk wealth management products with rights.

While stability is the mainstream, listed companies have temporarily retired from gambling on high-risk products to obtain high returns. According to Choice data, in 2023, only 32 listed companies will include the expression "securities investment" in their entrusted wealth management product plans, a decrease from last year.

It is worth noting that during the year, some companies suffered large losses due to "stock speculation". For example, Shaanxi Coal Industry (601225. SH), according to the semi-annual report, the company's net profit fell by more than half in the first half of the year, partly because its fair value change profit and loss was -2.660 billion yuan, of which the change profit and loss of stocks was -2.225 billion yuan. There are also some companies that "step on thunder" trust products. For example, Jinbo shares (688598. SH) recently responded on the investor interactive platform that as of now, the company has purchased two Zhongrong Trust products totaling 60 million yuan and has not been recovered. In addition to Jinbo shares, according to the reporter's incomplete statistics, there are also PharmaBlock (300725. SZ), Zheng Coal Machinery (601717. SH) and many other companies announced that their investment trust products were overdue or at risk of redemption.

Some listed companies "reduce their positions" for next year's financial management

At the same time that the scale of wealth management will shrink in 2023, some listed companies will choose to "reduce their positions" in advance in the announcement of the entrusted wealth management plan in 2024. According to incomplete statistics from the first financial reporter, as of December 19, a total of Tianma Technology (603668. SH), Arowana (300999. SZ) and 32 other companies announced their 2024 entrusted financial management plans. Excluding the 3 companies with missing data, 13 of them will have a significant reduction in the amount to be subscribed in 2024 compared with last year's plan, accounting for nearly half.

Among them, the largest decrease is Arowana. In the recent announcement, Arowana said that it will use idle raised funds of no more than 3 billion yuan (including this number) for cash management, a decrease of 1.5 billion yuan from the planned cash management scale of 4.5 billion yuan in 2023.

Coincidentally, Bluesail Medical (002382. SZ) recently announced that the total amount of wealth management products purchased in 2024 will not exceed 370 million yuan, a decrease of 145 million yuan compared with the 2023 plan. Innovative New Materials(600361. SH) recently announced that it plans to temporarily idle its own funds to purchase low-risk wealth management products, and the maximum daily balance of entrusted wealth management in 2024 will be capped at 2 billion yuan. In 2023, the maximum daily balance is capped at $5 billion.

"The reduction of the scale of entrusted wealth management indicates that the cash management plan of listed companies has changed. The above-mentioned industry insiders pointed out that it may be that listed companies are preparing to expand production or repurchase and need to use a large amount of money in a short period of time.

It is worth noting that in addition to reducing positions, there are also listed companies that choose to increase their positions or remain flat. For example, Yunnan Energy Investment (002053. SZ) said in the recently announced entrusted wealth management announcement that it agreed that the company and its holding subsidiaries should use no more than 800 million yuan of their own idle funds (excluding raised funds) to carry out entrusted financial management. In 2023, the scale of its entrusted wealth management investment will also be 800 million yuan. Zhongshun Jierou(002511. SZ) announced that in 2024, Zhongshun Jierou and its subsidiaries plan to use no more than 1 billion yuan of idle own funds for entrusted financial management, an increase of 400 million yuan compared with the plan of 600 million yuan in 2023.

Where is the money likely to go?

What is the reason behind the cooling of listed companies' enthusiasm for entrusted financial management? It may be related to the fluctuation of yields this year. From the perspective of deposits, bank deposit interest rates have been lowered several times since the beginning of this year, and have now fallen to a low level. According to the data monitored by the Rong 360 Digital Technology Research Institute, in November 2023, the average interest rates of 2-year, 3-year, and 5-year deposits decreased by 27BP, 39.5BP, and 43.5BP respectively compared with the end of last year.

At the same time as the deposit interest rate is lowering, the volatility of wealth management yields is also further increasing. According to a previous report by Yicai, the bond market fluctuated in June and September this year, and the net value of some wealth management products showed a short-term drawdown. According to Wind data, the average expected minimum rate of return on investment products of listed companies during the year is 1.66% based on the arithmetic average, compared with 1.82% in the same period last year.

Under the changes in the market, some listed companies have also chosen to reduce the scale of entrusted wealth management in stages, and use part of the idle funds for company repurchases and production expansion. Hengyi Petrochemical (000703. SZ) for example, the company recently announced that it will use 500 million yuan ~ 1 billion yuan to repurchase the company's shares, and the price of the repurchased shares does not exceed 10 yuan per share. In the long term, the company announced every year before 2021 that it would use part of the idle raised funds to purchase bank wealth management products, and after 2021, there was no announcement to purchase wealth management products, instead of frequently announcing the repurchase of the company's shares.

There are also companies that choose to rebalance idle funds to low-risk products such as reverse repo of treasury bonds. For example, West Magnetic Technology (836961. BJ) mentioned in a number of announcements issued in 2022 that it will use idle funds to appropriately invest in high-risk products such as equity as the investment target. In the 2023 announcement, it began to "turn", emphasizing that it will carry out low- and medium-risk wealth management of banks, reverse repo of treasury bonds, and other derivative financial products based on low- and medium-risk businesses such as bonds.

Looking ahead, most institutions are still optimistic about the recovery of the wealth management market. Ma Kunpeng, head of the financial research group of China Securities and chief analyst of the banking industry, believes that in 2024, the scale of bank wealth management is expected to achieve a growth of about 10%, and the balance is expected to reach 31 trillion ~ 32 trillion yuan. The downside of the benchmark of financial performance is narrowing and will gradually stabilize and rebound, which will also help the scale growth.

The relevant person of the above-mentioned listed company also said that the general plan is only based on the judgment of the current point in time, and the amount of wealth management products invested will be flexibly adjusted according to the actual operation of the company and the changes in the wealth management market. If the market is relatively stable and the yield continues to rise, the company can temporarily announce "increasing positions". On the contrary, if the market is not good, the listed company will not necessarily invest this part of the amount according to the upper limit in the plan.