Latest News:  


Credit crunch crimps money market funds' assets

By Wu Yiyao in Shanghai  (China Daily)

09:36, July 04, 2013

Total assets of money market funds shrank 47 percent in the first half to 2.52 trillion yuan ($410.8 billion), figures compiled by China Galaxy Securities Co Ltd show.

Many investors shifted from MMFs into higher-yielding short-term instruments during the money squeeze in June, said Li Kui, a Shanghai-based fund manager.

Volatile interbank market conditions and tight liquidity have increased pressure on the net asset values of many Chinese MMFs, which are heavily exposed to the interbank markets and short-term bond markets.

The overnight Shanghai interbank offered rate, an average of the rate at which large banks lend among themselves, rose to 5.5 percent on June 25 from 3 percent on May 20, down from a high of 13.4 percent on June 20.

"Under the circumstances, a seven-day money market fund with an annual yield of four percent has no appeal to investors, and many institutional investors redeemed money market funds to buy other, higher-yield products," said Li.

Analysts said public funds may recover in a couple of months and the worst phase of the liquidity crunch has ended.

They added that capital may flow back into lower-risk products such as MMFs.

"While banks are no longer under great pressure to secure deposits after the reporting season, they may no longer have incentives to offer higher-yield products," said Wu Yinzhou, an analyst with Shanghai-based Fulun Consultancy.

The assets under management of MMFs stabilized after a sharp contraction in June. The funds will gradually regain their appeal for investors, given their intrinsic low risk and high liquidity, said Wu.

We Recommend:

Chinese investors' happiness and sadness

Top 10 luxury villas of China in 2013

Soft gold -- gambiered Guangdong silk

China's 1st intelligent
high-speed train tested

Glamorous models pose at Shenyang auto show

Top 10 cities where home prices are set to soar

High-end singles party attracts swarm of girls

Beijing's taxicabs in 30 years

12th Int'l Automobile Industry Expo kicks off

Email|Print|Comments(Editor:WangXin、Chen Lidan)

Leave your comment0 comments

  1. Name


Selections for you

  1. Special operation members in training

  2. PLAAF's female fighter pilots

  3. Thousands celebrate gay rights in San Francisco

  4. Working in aircraft maintenance division

  5. Dance camp helps kids get training

  6. Heilongjiang issues blue rainstorm alert

  7. Fascinating display of Shanxi crafts

  8. Li Na ousted by Radwanska

  9. Diagnose crisis of China's solar sector

  10. Chinese grads' offbeat jobs

Most Popular


  1. Wealthy individuals 'see education as asset'
  2. Unite to prevent violence against women
  3. Dogs are the responsibility of their owners
  4. Pakistani PM's China trip to boost economic co-op
  5. Chinese company looks to take a bite out of Apple
  6. PwC: HK IPOs expected to boom this year
  7. Abe's 'values diplomacy' goes against the grain
  8. New features of the 5th Cross-Strait Forum
  9. Six questions about China’s space lecture
  10. Time to rethink taste for freshly killed poultry

What’s happening in China

Man swims in flood to deliver food for pregnant wife

  1. 32 endangered birds released into the wild
  2. Summer heat wave sweeps across China
  3. Dad still doubted son's death after 56 phone calls
  4. China builds emergency radio broadcast network
  5. Heavy rains kill 11, affect millions in SW China