"October's First Week Sees Big Drop in Financial Management Scale, How Does the Industry View Redemption Pressure?"

**Introduction**: A significant decline in the scale of wealth management in the first week of October, how does the industry view the redemption pressure?

Since the beginning of October, the scale of wealth management has continued to decrease, exerting a certain redemption pressure on channels. Due to the impact of recent bond market corrections and other factors, since the end of September, the yields of fixed-income wealth management products across the market have generally experienced a certain decline.

The scale of wealth management has shown a noticeable sequential decline.

Recently, market fluctuations have increased. Since September 24th, under a series of policy combinations, the A-share market once saw an epic surge, and the bond market also corrected, showing a seesaw effect between stocks and bonds, and bank wealth management once faced redemption pressure.

However, in the first week after the National Day holiday, the A-share market showed a high-opening and low-walking trend, with the Shanghai Composite Index once breaking through 3,600 points and then experiencing a sharp adjustment. As of the close on October 11th, the Shanghai Composite Index has fallen back to around 3,200 points, and the market enthusiasm has cooled down somewhat.

Advertisement

For bank wealth management channels, the current pressure of wealth management redemption has eased. An investment manager of a medium to large bank's wealth management subsidiary in North China lamented to reporters, "It feels like a roller coaster. In the first few days when the stock market surged, almost all banks faced significant redemption pressure. However, with the market enthusiasm cooling down recently, the pressure has improved a lot compared to before."

"The cash management wealth management products were the most affected by redemptions before. Due to the stock market surge at the end of September, which formed a seesaw effect with the bond market, the yields of some low-risk wealth management products have fallen to a certain extent, which has also intensified the motivation for investors to redeem their products to a certain extent." The investment manager said that currently, the redemption situation of bank wealth management in the market has stabilized.

In addition, some investors also said to reporters that in the middle and late September, they invested in a low-risk fixed-income wealth management product of a bank, but the profits have all been given back. "In the first few days, it was still profitable, but now when I open the account, I find that I have actually lost some in the past month. Although I am a bit reluctant, considering that the stock market has undergone a larger adjustment in the past few days, I have temporarily suspended the redemption plan and chosen to continue holding."

The bond market may ease the pressure of wealth management redemption.

It is worth mentioning that this weekend, the bond market has received good news. On October 12th, at a press conference held by the State Council Information Office, the Ministry of Finance introduced the incremental fiscal policy for the coming period. Among them, it clearly proposed that the central finance still has a large debt-raising space and a deficit increase space, and plans to increase the debt limit on a one-time basis to replace the local government's existing implicit debt and so on.In the view of industry institutions, the "debt resolution" proposed at this press conference is undoubtedly the biggest highlight and will drive the bond market trend. According to the reporter's observation, many wealth management platforms have also started to actively promote and publicize bond-based financial products, stating that the short-term bond market adjustment has passed and is likely to stabilize.

"The bond market's recovery means that the returns on fixed-income bank wealth management will be repaired to a certain extent," the investment manager said, adding that in the long term, the scale of bank wealth management is still expected to maintain a stable growth trend.

"Recently, although the fixed-income market faces certain pressures, there is no need to panic," said Zhou Maohua, a researcher at the Macro Group of the Financial Market Department of China Everbright Bank, to the reporter. With the domestic economy in a recovery phase, macro policies being positive, market liquidity remaining reasonably sufficient, and the central bank caring for the market, the market is expected to remain stable overall.

Dong Ximiao, the chief researcher of China United, told the reporter that on October 12, the Ministry of Finance issued a series of incremental policy measures. The prominent feature is the comprehensive consideration of the needs for stable growth, risk resolution, expansion of domestic demand, and benefiting people's livelihood. These measures are highly comprehensive and targeted, conveying to the market the confidence in strengthening counter-cyclical adjustments and the determination to deepen reforms.

"For example, in terms of risk resolution, it is planned to increase the debt limit on a one-time basis to a larger scale, replace the existing implicit debt of local governments, and increase support for local governments to resolve debt risks, allowing various places to free up more energy and financial resources to promote development and stable growth. Moreover, this year, the new special debt limit of 3.9 trillion yuan has been arranged, which is also the largest scale in history," Dong Ximiao said.

Looking forward to the future trend of wealth management products, Huaxiang Securities believes that whether the wealth management market in October will continue to develop in a negative feedback direction depends on whether the bond market is repaired or adjusted. The institution tends to believe that the possibility of wealth management experiencing redemption negative feedback in October is not high.

Lu Jinfei, Senior Deputy Director of the Financial Business Department of Oriental Jincheng, believes that in the short term, it is still necessary to pay attention to the sustainability of the stock market trend, the specific details of incremental fiscal policies, the marginal changes in the domestic economic foundation, and the changes in the real estate market prosperity after the relaxation of purchase restrictions in first-tier cities, which may disturb the scale of bank wealth management. However, short-term bond market disturbances do not change the long-term upward trend of wealth management scale.