Investors plumping for bonds and trusts

By Zhang Fengming  |   2008-12-19  |     NEWSPAPER EDITION

SHANGHAI investors preferred trust and bond-related wealth management products and shunned investments linked to overseas markets in the third quarter as they sought stable returns, the local regulator said yesterday.

Yuan-denominated wealth management products dominated the market with the total capital raised topping 127.16 billion yuan (US$18.6 billion) in the third quarter, accounting for 91.7 percent of the total capital raised for yuan products, the Shanghai Bureau of the China Banking Regulatory Commission said yesterday in a report.

Trusts and bond-linked products, which offer stable returns, were greeted warmly by investors in the quarter. The two products contributed to 86.87 percent of the total capital raised for yuan products in the third quarter.

Overseas banks including Standard Chartered Bank and Bank of East Asia have dashed into the trust wealth management products market after overseas banks were allowed to trade in the market after the second quarter.

Banks have stopped issuing products linked to stock markets due to their sluggish performance. The benchmark Shanghai Composite Index has lost two-thirds of its value since its peak in October 2007.

The once-popular products under the qualified domestic institutional investor scheme are being shunned by investors because of the sharp drop in overseas capital markets. The scale of QDII products, which allow domestic investors to tap the overseas markets, shrank by 64.58 percent from a quarter ago. About 135.62 billion yuan was raised in the third quarter for personal wealth management products, up 5.14 percent.