China’s MMF market hits a fresh high in April

27 May 2014   Category: News, Asia, China, Global   By Hui Ching-hoo

Mainland Chinese investors are diverting an increasing amount of capital into money market funds (MMFs), resulting in an all-time high AUM in these products of 1.75 trillion RMB (US$280 billion) as of the end of April, according to the Asset Management Association of China (AMAC).

This represents month-on-month growth of around 300 billion RMB compared to AUM of 1.45 trillion RMB at the end of March.

Xav Feng, head of Asia Pacific research at Lipper, anticipates that allocations to MMFs will continue to pick up in size as China’s equity and fixed-income markets have remained sluggish this year.

When it comes to returns and volatility, MMF products are attractive for local investors to park their cash in under current market conditions, he adds. 

The MMF market is flourishing as a number of Mainland ecommerce and internet giants such as Alibaba Group, Tencent Holdings, and Baidu have dipped their toes into the electronic finance market in recent years, launching online wealth management products.

Last month, a report from consultancy Cerulli Associates warned that a lack of regulatory oversight and possible investment outside of short-term MMFs could put pressure on asset managers’ profit margins.