Oct
29
China Banks Enter Eye of Storm Adding Risky Debt to Wealth Funds
By-
Wealth products increasing leverage, extending asset maturity
-
Lenders getting drawn into high-yield competition, says HSBC
The wealth-management products that banks sell at branches across China are often considered as safe as deposits by customers. There are growing reasons to question that faith.
The ability of Chinese lenders’ $2.4 trillion of WMPs to generate the returns they promise is being undermined as monetary easing has pushed corporate bond yields to a five-year low. Loath to lose market share by advertising weaker performance, managers of the funds have been adding leverage, extending maturities and buying higher-yielding notes that are rarely traded, according to consultancy CNBenefit and HSBC Holdings Plc…
China Banks Enter Eye of Storm Adding Risky Debt to Wealth Funds
