The domination of China’s domestic mutual fund market by money market funds becomes apparent from looking at two charts.
Tianhong Asset Management has placed a temporary daily cap on investments in Yuebao, the the world’s largest money market fund, in order to stem the influx of money during the Chinese New Year period.
Alibaba-distributed fund Yuebao has lowered the maximum individual investment for the second time as China’s regulator tightens rules for money market funds.
China’s top three money market funds command one-third of the fund category’s assets, raising concerns about liquidity, according to a report by FitchRatings.
The Yuebao money market fund had inflows of RMB 623.5bn ($91.8bn) in the first half of 2017 thanks to its 4% yield, according to mainland media.
With higher yield than bank deposits, Chinese money market funds have for the first time attracted more institutional money than retail, according to Fitch Ratings.
The macro drivers for EM equities are largely unaffected and the firm maintains its overweight.
Mainland retail investors queued for a day to snap up government savings bonds, which are perceived as a safehaven for capital, mainland media reported.
Demand for Chinese money market funds (MMFs) is expected to rise at a slower pace after a surge in asset growth over the last 18 months subsides, according to a new report from Fitch Ratings.