Chinese banks’ wealth management units are suffering a crisis of confidence as mum-and-dad investors have fled the sector after products they thought were risk-free suddenly dropped in value, reports the Financial Times. Volatile markets and a stream of redemptions at the end of last year pushed lenders’ managed assets down by more than RMB 1.36 trillion ($200 billion), raising concerns about future growth for a business that supplied banks with a steady stream of fees and crucial capital for corporate bond issuers.
Many conservative investors panicked when bond yields surged and prices dropped as China suddenly abandoned its zero-Covid policy after nearly three years of lockdowns and other growth-sapping virus curbs.
The offerings in the RMB 24 trillion industry—mostly bonds, money market funds and other fixed-income investments—had long been seen as risk-free with the promise of relatively high returns.
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