The yield of wealth management products continued to decline, and the investment enthusiasm of listed companies cooled down

Recently, many listed companies have successively announced the new year's entrusted wealth management plan, in terms of scale and quantity, compared with last year. According to Choice data, since 2024, a total of 1,251 A-share listed companies have announced entrusted wealth management plans (including wealth management products, large-amount certificates of deposit, structured deposits, securities certificates, trusts and other products, the same below), a decrease of 9.7% over the same period last year, and the total amount of entrusted subscription and wealth management is expected to be 1.6 trillion yuan, a year-on-year decrease of 7.5%.

Some people in the industry believe that the cooling of entrusted financial management of listed companies is mainly related to market changes. On the one hand, the yield of low-risk products such as deposits invested by listed companies has been declining, and medium- and high-risk trust and wealth management products have frequently exploded; on the other hand, as listed companies adjust their dividend mechanisms under regulatory requirements, the idle funds available for investment will also be greatly reduced. In the long run, the cooling tide of listed companies' financial management may continue.

The wealth management funds of listed companies have shrunk

On April 23, Jiangsu Zhongnan Construction Group Co., Ltd. issued the "Announcement on the Authorized Quota for Entrusted Wealth Management Matters in 2024", stating that in 2024, it will carry out entrusted wealth management investment within 900 million yuan, including but not limited to low-risk products such as bank wealth management products, structured deposits and currency funds. At the same time, according to the announcement, last year's amount was 1.4 billion yuan, which also means that the company's estimated investment scale of idle funds this year has shrunk by 500 million yuan.

On February 26, Zhejiang Tianhong Lithium Co., Ltd. announced that it would use idle raised funds of no more than RMB 40 million for cash management. In February last year, the company's announcement showed that the amount was 60 million yuan. In addition, some companies have lowered their securities investment quotas. On April 16, Jilin Aodong announced that the company intends to use no more than 1 billion yuan of idle own funds for securities investment. Last year, Jilin Aodong's upper limit on securities investment once reached 3.2 billion yuan.

In addition to reducing the planned investment quota in advance, the actual investment scale of many listed companies has also shrunk. According to Choice data, since 2024, a total of 405 listed companies have completed entrusted wealth management, down 27.9% from the same period last year, and the total subscription amount of listed companies is 152.666 billion yuan, down 39.8% year-on-year. Among them, the largest decline in scale was deposit products (including structured deposits, large-amount certificates of deposit, and call deposits). Since 2024, listed companies have successfully implemented 121.675 billion yuan of deposit products, far lower than the 206.1 billion yuan in the same period in 2023.

Changes in the market environment are the main reasons

Some people in the industry believe that the reduction of idle capital investment by listed companies is related to factors such as the recent decline in market yields and the reduction of idle funds of listed companies.

Due to changes in the market environment, the investment income of some listed companies has shrunk this year. Taking Bomin Electronics as an example, according to the company's "Progress Announcement on the Use of Part of the Idle Raised Funds for Cash Management", the annualized rate of return of 30 million yuan and 3-month unit large-amount certificates of deposit purchased by Bomin Electronics in January is expected to be 1.5%. In April, the purchase amount of the same three-month unit large-amount certificate of deposit was increased to 50 million yuan, and the annualized rate of return is expected to drop to 1.4%.

In fact, in recent years, the yield on deposits and low-risk wealth management has been gradually decreasing. In December 2023, six major state-owned banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank, officially announced that they would reduce the listed interest rates on deposits, and the three-year fixed deposit interest rates of major state-owned banks broke through the 2% integer mark and dropped to 1.95%. According to the data of Puyi Standard, in March 2024, a total of 2,587 new wealth management products were issued in the whole market, an increase of 559 from the previous month, of which 342 were open-ended products, with an average performance benchmark of 3.11%, down 0.16 percentage points from the previous month, and 2,245 were closed-end products, with an average performance benchmark of 3.22%, a decrease of 0.09 percentage points from the previous month.

According to an industry insider's analysis, this also means that when listed companies make deposits and financial investments, their returns may be "not as good as before". Some listed companies have even suffered large losses in the medium and high-risk products they have invested in. Taking Jilin Aodong as an example, according to the company's securities investment table, Jilin Aodong added a total of 5 domestic and foreign stocks in Liaoning Chengda, First Pharmaceutical, Nanjing Pharmaceutical, Luye Pharmaceutical, and Shanghai Pudong Development Bank during the reporting period last year, of which 3 stocks recorded losses. The total profit and loss during the reporting period was 76,582,270.01 yuan.

There are also some companies that step on the thunder of wealth management products and face the dilemma of overdue return of the principal. For example, Zhejiang Jihua Group Co., Ltd. (hereinafter referred to as "Jihua Group") recently announced that the purchase of Zhongrong Trust Fengteng No. 83 Collective Capital Trust is planned to be postponed, and the principal that has not yet been recovered is 27.661 million yuan. Previously, Jihua Group has been a "big investor" of idle funds. According to the announcement, the total cash management quota of the company (and its subsidiaries) last year was no more than RMB350 million. Similarly, Hangzhou Micro-Optoelectronics Co., Ltd. The company announced that it recognized a total of 203.7583 million yuan in fair value change losses for the wealth management products issued by Zhongrong Trust. Losses on changes in value also further affected performance. According to the performance forecast, the company's profit in 2023 will be 105 million yuan to 135 million yuan, a year-on-year decrease of 56.16% to 65.90%. In addition, some people in the industry believe that the increase in dividends is also the reason why listed companies have reduced the scale of entrusted financial management in stages.

According to Choice statistics, as of March 20, 182 A-share companies have disclosed dividend plans (excluding special cash dividends), and the total cash distribution is expected to exceed 100 billion yuan, a significant increase from before. The above-mentioned industry insiders believe that as listed companies optimize the proportion of dividends and repurchases in accordance with regulatory requirements, the proportion of idle funds has decreased, which has also affected the financial purchase behavior of listed companies to a certain extent.

Dong Ximiao, chief researcher of Zhaolian, said that there are many factors that affect the investment behavior of listed companies. For example, from the perspective of the listed company's own operation, it may be that the listed company has positive expectations for the industry in which it is located and plans to use more idle funds to expand production, or it may be that the company is facing greater operating pressure and has less idle funds, so as to adjust the scale of idle capital investment. From the perspective of the financial market itself, it may be related to the declining yield of wealth management products or deposit products, and listed companies choose to adjust their investments due to changes in yields. It cannot be generalized and needs to be analyzed on a case-by-case basis.

Turning to exploring diversified investment paths

While the yields of mainstream targets such as deposits and low-risk wealth management continue to shrink, some listed companies have begun to explore diversified investment paths, trying to "overtake in corners", and seek higher income space on the basis of controllable risks. For example, Wuhu Fuchun Dyeing and Weaving Co., Ltd. recently announced that it would invest a total of 30 million yuan in a floating income certificate of Guoyuan Securities, with an investment period of 183 days and a yield of 2.10% to 3.70%.

In contrast, ZTE-Shenyang Commercial Building (Group) Co., Ltd. (hereinafter referred to as "ZTE Commercial") is more keen on reverse repo of treasury bonds. According to the announcement, on March 28, 2024, the company used its own idle funds of 50 million yuan to invest in the reverse repurchase of treasury bonds, with an investment period of one day and an annualized rate of return of 4.95%. In the long term, ZTE Commercial will carry out at least nine large-scale reverse repurchase operations of treasury bonds in 2023, with a profit of about 1.3 million yuan.

According to Choice data, as of April 23, since 2024, listed companies have implemented entrusted wealth management, and the scale of treasury bond reverse repo, brokerage income certificates and other products is 1.893 billion yuan and 8.211 billion yuan respectively, which is a certain increase from last year.

Liao Hekai, an analyst of Jinle function, believes that the current overall economic situation is still highly uncertain, and the cash flow of listed companies is not abundant, and it is more to prepare for the development of the main business, and the cash flow is mainly to ensure production and operation. "In the case of some business risk exposure and the investment market situation is not very clear, the cooling trend of listed companies' financial investment will continue for a long time, in line with market expectations. Liao Hekai said that as the cash management of idle funds of listed companies tends to be conservative as a whole, the stability of the target is a priority.

Wang Fangran