The bond market has "cooled down", will bank wealth management fluctuate greatly
2024-06-08
117 CommentsAffected by certain factors, interest rates across various maturities have generally risen recently, leading to an overall weak performance in the bond market. Although the net value increase of bond-based wealth management products has narrowed on a month-on-month basis, there has been no significant increase in the net value breakage rate.
Despite the regulatory halt of insurance co-deposits, interest supplement deposits, trust smoothing mechanisms, and closing price valuations, which have been used by banks to smooth net value fluctuations this year, the scale of wealth management companies has been increasing due to the new round of deposit rate cuts by state-owned large banks and the "shift of deposits."
1. Which types of products are most affected by the recent significant pullback in the bond market?
2. Against the backdrop of the bond market cooling and the pullback in wealth management net values, how will the scale of bank wealth management evolve in the second half of the year?
3. In the context of the "cooling" bond market, how should the asset allocation of wealth management products be done next to enhance performance stability and investor experience?
4. What should be noted when investing in bank wealth management in the face of bond market fluctuations?
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1. In this round of bond market adjustments, medium and long-term duration and high leverage products have been more noticeably affected. Since bank wealth management products mostly hold medium and short-term bonds, the overall fluctuation of product net values is controllable. However, some products that achieve high returns through leverage are more sensitive to interest rate changes, and potential net value breakage risks should be vigilant. Given the current economic situation, the possibility of a systemic reversal in the bond market is not high. The central bank's actions are mainly aimed at correcting long-term interest rates, not changing the overall trend of the bond market. It is expected that the bond market will gradually stabilize, with interest rates fluctuating within the central bank's desired range, and the possibility of wealth management product net values continuing to decline and triggering a wave of net value breakage is low.2. In the context of a cooling bond market and the retraction of net values of wealth management products, how will the scale of bank wealth management evolve in the second half of the year?
A new round of deposit rate cuts, especially the collective reduction of RMB deposit rates by state-owned large banks, is expected to further drive the transfer of deposit funds to the wealth management market. Although some measures to smooth out net value fluctuations have been halted by regulators, on balance, bank wealth management products, with their relatively lower risk and more stable returns, remain a choice for many investors. Considering the long-term trend of interest rates, the stickiness of market demand for low volatility, and the momentum of the wealth management market, it is anticipated that the scale of bank wealth management will remain stable in the second half of the year. However, the potential impact of bond market volatility on the wealth management market in the second half of the year should also be vigilantly monitored.
3. Against the backdrop of the "cooling" bond market, how should the asset allocation of wealth management products be managed to enhance performance stability and investor experience?
Firstly, it is essential to closely monitor policy directions, as recent policies from the central bank and the Ministry of Finance have increased disturbances in the bond market. Wealth management should balance the odds and the probability of winning when selecting asset types in the short term, with a focus on long-duration bonds that are not at critical maturities. Secondly, increasing the allocation of low-risk assets is advisable. Compared to low-grade credit bonds, government bonds and high-grade credit bonds carry lower credit risk and are more suitable for allocation during a cooling bond market. Lastly, increasing the proportion of assets with good liquidity, such as money market funds, can help address potential liquidity risks.
4. In the face of bond market fluctuations, what should investors pay attention to when investing in bank wealth management products?
Investors should fully understand the characteristics, investment strategies, risk levels, and historical performance of the wealth management products they hold. This understanding can help them better comprehend the product's volatility under current market conditions, leading to more reasonable judgments. Secondly, investors should maintain a long-term perspective and avoid making impulsive decisions due to short-term fluctuations. If the held product has not experienced significant retraction and aligns with personal investment plans, it may be worth considering to continue holding and waiting for the market to recover. If investors have doubts about market trends, product characteristics, or risk management, they can seek advice from professional wealth management consultants or investment institutions. In summary, when facing the retraction or loss of wealth management products, ordinary investors should calmly analyze, respond rationally, and make reasonable decisions based on their actual situation and market environment.
Wealth management carries risks, and caution is necessary.