The release of new rules aimed at reining in China’s swelling wealth management product (WMP) sector could be delayed as the nation’s markets continue to struggle amid looming economic threats.
The WMP rules, a part of Beijing’s deleveraging campaign, were set to be published in July but regulators have decided to push back the release date following the recent slump in China’s stock market and currency, sources told Caixin.
The aim of the regulations would be to restrict the ability of banks to sell risky WMPs by forcing them to offer yields in line with the performance of the products’ underlying assets. Banks would also be limited to investing just 4% of total assets in a single non-standard investment so as to diversify risks.
The WMP market stood at RMB 30 trillion ($4.5 trillion) at the close of 2017, making it the largest component of China’s asset management industry. While this figure has fallen in 2018, many banks are now turning to structured deposits to raise funds instead.