Chinese wealth management products are seeing a massive sell off. Here’s what’s behind it.

view original post

A stockholder checks the closing points of A-share indexes on his mobile phone in Hangzhou, east China’s Zhejiang Province.

Synopsis

Chinese bond prices have declined sharply, prompting a surge of wealth management product redemptions by risk-averse individual investors. Many other individual investors, who have long considered bond-backed wealth management products to be one of the safest havens, are only now learning about their risks.

Kelsey Cheng and Wu Yujian When Li Ming put around 10,000 yuan ($1,450) in a wealth management product (WMP) in November, he expected nothing short of a fool-proof investment. But within just a few days, local bond market turmoil led to plunging values of WMPs, which had invested heavily in bonds, stoking panic among retail investors including Li. “It’s supposed to be a low-risk WMP, and I have never taken a loss from such products before,” he

  • FONT SIZE
  • SAVE
  • PRINT
  • COMMENT

Uh-oh! This is an exclusive story available for selected readers only.

Worry not. You’re just a step away.

Congratulations! This story is unlocked for you.

We’ve rewarded you with ET Prime access for 30 days!

Clean ad-free reading experience onThe Economic Times

Unlimited access to exclusive stories & insights across 20+ sectors

In-depth reports on 4000+ Stocks, updated daily

Complete access to ET Print Edition, the digital newspaper

Activate your Access

No card details required

‘;
});
}
if(listing) {
var h3 = “You tried reading ” + listArr.length + ” locked stories in the past ” + threshold + ” days.”, h4 = “Become an ET Prime member and don’t miss out on these exclusive stories.”;
var html =

‘ + h3 + ‘

‘ + h4 + ‘

    ‘ + listing + ‘

‘;
$(‘#paidSCWidget’).html(html);
var callback = $(‘#paidSCWidget’).attr(‘data-callback’);
if(callback && window[callback]) {
window[callback]();
}
customDimension.dimension72 += ‘ | Shown SYFT no Trial_With Missed Paywalled Articles Collection’;
} else {
_processNormal()
}
}
});
} else {
_processNormal();
}
} catch (e) {
_processNormal();
}
}, function () {
_processNormal();
});
//console.log(‘storyCollectionLoad’, $);
}

Why ?

  • Exclusive Economic Times Stories, Editorials & Expert opinion across 20+ sectors

  • Stock analysis. Market Research. Industry Trends on 4000+ Stocks

  • Clean experience with
    Minimal Ads

  • Comment & Engage with ET Prime community

  • Exclusive invites to Virtual Events with Industry Leaders

  • A trusted team of Journalists & Analysts who can best filter signal from noise