More investors turning to wealth products
Households in China increased the amount of savings diverted into wealth-management products to a record 12.7 trillion yuan ($2.1 trillion) as the government tries to manage risks from an explosion in shadow banking.
The outstanding value rose 24 percent in the first half from the end of last year, the China Banking Wealth Management Registration System said on its website on Friday. The average annualized return was 5.2 percent, compared with 3 percent for benchmark one-year deposits.
As signs emerge of weakening demand and rising default risks for higher-yield trust products, sales of the wealth products may keep surging. For banks, a more than 12-fold increase in the value of the products since 2009 is pushing up funding costs, threatening to weigh on profits.
