As the year draws to a close, a notable trend has emerged within the banking wealth management sector—a surge in companies purchasing their own financial productsProminent organizations such as China Merchants Bank Wealth Management and Xingyin Wealth Management have taken steps to invest their own funds into the products they offerThis phenomenon isn’t entirely new; in fact, the industry has witnessed similar buying waves in prior years, with several firms, including Everbright Wealth Management, utilizing their own capital to invest in their offerings.
In light of this self-purchasing activity, Xu Zewei, Secretary of the Party Committee and President of the Beijing Internet Finance Industry Association, posits that this move by the wealth management subsidiaries reflects a positive signal to the market and investorsIt is intended to stabilize investor sentiment, bolster trust in the equity products offered by these companies, and achieve a better balance in asset allocation while managing risks effectively.
Recent announcements from various wealth management firms indicate that the products being purchased often possess equity rights
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For instance, China Merchants Bank has openly revealed that its proprietary funds have been directed towards acquiring its own "Value Selection Series Products." Notably, should the net value of these products drop below one, the company waives management feesAn executive from a wealth management firm has remarked that internal purchases are aligned with investor interests, fostering a shared responsibility for risk.
This raises a question: why are wealth management firms increasingly investing in their own products? According to Cui Shengyue, a researcher at Puyin Standard, the equity market has experienced a general recovery, albeit still at a relatively low level, presenting unique opportunities for investmentThe purchases of equity-inclusive products signify these firms' optimism regarding the future development of the wealth management market.
Since September of this year, fueled by a series of favorable policies, the equity market has witnessed positive momentum, leading to substantial increases in returns for equity and hybrid wealth management products
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Data indicates that as of November 15, the annualized yield for hybrid products across the market has surpassed 5.00%, significantly outpacing levels witnessed before late SeptemberCui further explained that with a continued positive forecast for the equity market, wealth management firms are enhancing their portfolios of equity and hybrid productsConcurrently, as the equity market stabilizes, these firms are amplifying their investment in products with embedded rightsIn this context, actions like reducing fees and self-purchasing help to set a strong example for market participants.
Looking ahead, will more wealth management companies join this trend of self-purchasing? Wang Yifeng, Chief Analyst of the Financial Industry at Everbright Securities, believes that from recent trends, when one or two firms initially announce their self-purchasing moves, more entities typically follow suit
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This strategy reflects confidence in their products and strengthens overall institutional competitiveness.
After the implementation of new asset management regulations, banking wealth management has comprehensively entered a phase dominated by net asset value (NAV) transformationsWhile numerous firms expedite their self-purchases, there remains a strong emphasis on communicating risk warnings to investorsThe message conveyed is clear: “Wealth management is not the same as deposits, and these products carry risks.” Investors considering investments in equity or hybrid products must comprehensively evaluate their risk tolerance and clarify their investment objectivesCui reiterates that although the equity market is exhibiting positive trends due to supportive policies, investors must remain alert to short-term risks posed by market volatility, avoiding the temptation to chase after heightened prices
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Diversified investment strategies are encouraged to mitigate the impacts of short-term fluctuationsWhen selecting products, a thorough understanding of the product descriptions—focusing on investment scopes, strategies, and risk levels—is essential, intertwined with one's financial situation and goals for sound allocation.
In parallel, banking wealth management companies are enhancing their analytical capabilities concerning equity assetsXu Zewei asserts the importance of these firms in constructing a robust framework for multi-asset and multi-strategy research, with efforts directed toward improving research capabilities and team developmentThese measures aim to elevate investment performance and client satisfaction, thereby helping the firms distinguish themselves in the fiercely competitive market landscape.
In examining the implications of this self-purchase trend, it becomes evident that it serves as a profound voter of confidence in their own products by wealth management firms
This self-investment can bolster investor trust, acting as a catalyst for potentially revitalizing the market after a period of turbulenceWhile navigating the complexities of financial products requires diligence and prudence from investors, the evolving landscape of the banking wealth management sector signals a pathway towards both rejuvenation and growth.
These developments underscore the vital role banks play in shaping investor sentiment and confidenceBy aligning their interests with those of their clients through self-purchasing, wealth management firms not only improve their reputations but also foster an environment conducive to more stable investmentsAs the financial year comes to an end and as we gear up for the new one, how these firms approach self-purchasing and investor engagement will likely play a critical role in the overall health and trajectory of the wealth management market in the future.