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**MNI: Five Things We Learned From China Banking WMP Report

MNI (London)
     **BEIJING (MNI) - China's Banking Wealth Management Registration & Trust
Center published its annual report on banking wealth management products (WMPs)
late Friday. Here are five things we learned.
     - Outstanding banking WMPs amounted to CNY29.54 trillion as of the end of
2017, up 1.69% y/y. The growth rate was significantly lower than the 23.63%
recorded in 2016, due to regulators' determination to crack down on the "idle
cycling" of money within the financial system.
     - The main reason causing outstanding banking WMPs to grow at a slower pace
is the sharp fall in outstanding interbank WMPs, which are sold to financial
institutions. Outstanding banking WMPs only amounted to CNY3.25 trillion as of
the end of 2017, only around half of CNY6.65 trillion seen in 2016, reflecting
the effects of tighter financial regulation.
     - Retail investors showed continued appetite for banking WMPs, with the
outstanding amount sold to retail investors higher by 23.31% y/y to CNY14.6
trillion in 2017, accounting for 49.42% of outstanding WMPs. Taking into account
WMPs sold to high net worth and private bank clients, the percentage was 66.99%
in 2017. 
     - Outstanding non-principal guaranteed WMPs -- which are not recorded on
banks' balance sheet -- accounted for 75.05% of total WMPs in 2017, lower than
the 79.56% recorded in 2016. The percentage will likely continue to fall as
regulators remain determined to clamp down on these WMPs by including them in
macro prudential assessment (MPA) tests, forbidding banks to pay back the
principal if the WMP suffers losses.
     - Money invested in non-standard assets accounted for 16.22% of outstanding
WMPs in 2017, slightly down from 17.49% in 2016. Bonds are still the preferred
investment option for WMPs, accounting for 42.19% of outstanding WMP investments
in 2017, slightly lower than 43.76% seen in 2016. Corporate bonds will likely be
impacted if the scale of WMPs fell to increase, as 34.08% of outstanding WMPs
were invested in corporate bonds, which have more attractive yields than
government bonds, in 2017.
--MNI Beijing Bureau; +86 10 85325998; email: he.wei@marketnews.com
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MAQDS$,MAUDR$,MAUDS$,M$A$$$,M$Q$$$,M$U$$$]
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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