China’s statistical authorities have just provided new data on the asset allocation of funds raised via banks’ wealth management products (WMPs). The new data confirm a significant inflow into leveraged positions in fixed income and money market instruments in 2015, as well as joint-stock banks’ and city commercial banks’ increasing reliance upon WMPs as funding instruments. The data also suggest banks are facing declining margins on WMP issuance, and are resorting to riskier strategies (including equity investments) to boost returns.
