Core Viewpoint - The banking wealth management sector is adjusting its asset allocation strategies in response to declining interest rates, shifting away from bonds and equity assets towards public funds, cash, bank deposits, and non-standardized debt assets [1][4]. Asset Allocation Changes - As of the end of June, the asset allocation of wealth management products remains predominantly in fixed-income assets, while the proportion of bonds and equity assets has decreased. Specifically, the balance of investments in bonds and equity assets was 13.78 trillion yuan and 0.78 trillion yuan, accounting for 41.8% and 2.38% of total investment assets, respectively [2][3]. - The allocation to public funds has significantly increased, with a balance of 1.38 trillion yuan, representing 4.2% of total investment assets, an increase of 0.45 trillion yuan compared to the end of the first quarter [3]. Challenges in Fixed-Income Asset Returns - The average annualized return of wealth management products has declined to 2.12% in the first half of the year, down from 2.65% in 2024, indicating a 0.53 percentage point decrease. The difficulty in obtaining returns from fixed-income assets has increased, with a notable differentiation between allocation and trading strategies [4][5]. - Credit bonds continue to dominate the allocation, comprising 90% of bond investments, with a total holding of 12.79 trillion yuan, which is 38.79% of total investment assets [4]. Market Trends and Future Outlook - The total scale of the banking wealth management market reached 30.67 trillion yuan by the end of June, reflecting a 2.4% increase from the beginning of the year and a 7.54% year-on-year growth. However, the growth rate may slow down in the medium to long term due to declining returns on wealth management products [5][6]. - The pressure on the expansion of wealth management product scales is expected to increase as the advantages of returns, particularly for cash management products, diminish compared to deposits [6].

Core Insights - The banking wealth management sector is adjusting its asset allocation strategies in response to declining interest rates, shifting from bonds and equity assets to public funds, cash, bank deposits, and non-standardized debt assets [1][4] Asset Allocation Changes - As of the end of June, the balance of wealth management products invested in bonds and equity assets was 13.78 trillion yuan and 0.78 trillion yuan, accounting for 41.8% and 2.38% of total investment assets, respectively. This represents a decrease from 43.9% and 2.6% at the end of the first quarter [2] - The proportion of public fund allocations in wealth management products has significantly increased, with a balance of 1.38 trillion yuan, representing 4.2% of total investment assets, up from 0.93 trillion yuan in the previous quarter [2][3] Shift to Low-Volatility Assets - Wealth management products have increased their allocation to low or non-volatile assets, with cash and bank deposits totaling 8.18 trillion yuan and non-standardized debt assets at 1.82 trillion yuan, representing 24.8% and 5.52% of total investment assets, respectively [3] Declining Yield Trends - The average annualized yield of wealth management products has dropped to 2.12% in the first half of the year, down from 2.65% in 2024, indicating increasing difficulty in generating returns from fixed-income assets [3][4] Credit Bond Dominance - Credit bonds remain the primary focus within bond allocations, with a total of 12.79 trillion yuan held, accounting for 38.79% of total investment assets, although this is a decrease of 2.34 percentage points from the previous year [2][4] Market Growth and Future Outlook - As of the end of June, the total scale of the banking wealth management market was 30.67 trillion yuan, reflecting a growth of 2.4% year-to-date and 7.54% year-on-year. However, the growth rate may slow down in the medium to long term due to declining yields [4][5] - Analysts predict that while short-term growth may continue due to deposit pricing effects, the attractiveness of wealth management products may diminish as yields decline, leading to increased pressure on expansion [5][6]