Reuters: Chinese MMF Yields Falling
A piece on the website Zawya published by Reuters News titled, "Biggest Chinese money market fund's yield nears record low," tells us, "The yield on China's popular Yu'Ebao money market fund has dropped to near record lows, reflecting lower interest rates and anaemic growth, despite efforts to stabilise the economy. Analysts said the yield on the Tianhong Yu'Ebao, which is China's largest with more than 600 million investors, will likely fall further as the country's economy faces fresh headwinds." They quote Rocky Fan, economist at Guolian Securities, "In the medium term, the yield could go down further if China fails to stabilise the economy." The piece says, "The seven-day, annualised yield of Tianhong Yu'Ebao, the $100 billion fund sold via popular payment app Alipay, has dropped to 1.294%, just above the record low hit during the COVID-19 pandemic in November, 2022. Money market funds, which park most of their assets in bank deposits, have been hard hit by recent rounds of reductions in deposit rates, said Ivan Shi, head of research at fund consultancy Z-Ben Advisors, predicting their yields will fall." She tells Reuters, "Fund managers may also be under pressure to lower their fees, now that lower yields have made the cost of holding money market funds relatively higher." The piece adds, "Yu'Ebao was launched in 2013 by Tianhong Asset Management Co, a mutual fund company controlled by Ant Group. Its seven-day yield of less than 1.3% compares with a peak of around 7% a decade ago, and the downward trend could continue. Wang Honglin, professor of the Shanghai Advanced Institute of Finance, suggested China should cut lending rates by around 150 basis points in the face of 'unprecedented challenges facing Chinese exporters' as a trade war looms."
