WSJ Says China's Yu'e Bao Shrinks
The Wall Street Journal writes, "World's Largest Money Market Fund Is Shrinking as It Battles Rival on Yields." They tell us, "Ant's flagship money-market fund, Tianhong Yu'e Bao, shrank by more than a third last year after Chinese regulators became concerned about its size and potential risk to the country's financial system. The fund's assets under management fell to 1.13 trillion yuan ($167 billion) at the end of 2018 from 1.69 trillion yuan in March, according to data provider Wind Information Co.... To control its size, the fund's manager imposed caps on inflows and lowered returns by reducing its holdings of hard-to-sell assets. And last year, Ant also added a dozen money-market funds from other asset managers to its online wealth-management platform to give customers other investing options. Then its rival appeared on the scene. Tencent Holdings Ltd., which owns China's other giant mobile payments network -- WeChat Pay -- last fall began offering a select group of users the opportunity to invest their spare cash in online money-market funds similar to Ant's Yu'e Bao, which translates to 'leftover treasure' in Chinese." The Journal adds, "In November, the country's central bank warned in an annual financial stability report that an unnamed large money-market fund could jeopardize the stability of the entire financial system—and society as a whole. Because so many people have invested in the fund, any problems it might have repaying investors could spark public anger and protests. Industry participants believe the People's Bank of China was referring to Ant's Tianhong Yu'e Bao fund." (For more, see our Jan. 30 News, "FT Says China's Ant Shrinks.")
