Investment Rating - The report does not explicitly provide an investment rating for the banking wealth management industry Core Insights - The banking wealth management market has shown significant growth, with the total scale reaching 30.67 trillion yuan by the end of June 2025, a year-on-year increase of 7.53% [3][10] - The proportion of closed-end products with a duration of over one year has increased to 72.86%, indicating a trend towards longer-duration products [3][10] - Fixed-income products dominate the market, accounting for 97.20% of the total wealth management product scale, while cash management products are experiencing a contraction [3][11] - The proportion of wealth management products investing in public funds has risen to 4.2%, reflecting a shift in investment strategy [3][12] - The weight of credit bonds in wealth management products has decreased, with holdings at 312.79 billion yuan, representing 38.79% of total investment assets, down 2.34 percentage points year-on-year [3][12] Summary by Sections Regulatory and Industry Dynamics - The banking wealth management market has seen a notable increase in product scale, driven by factors such as the reduction in deposit rates and continuous innovation by wealth management companies [3][10] - The trend towards longer-duration products is aimed at enhancing yield and improving asset-liability matching [3][10] Yield Performance - For the week of July 21-27, 2025, cash management products recorded an annualized yield of 1.35%, down 2 basis points from the previous week [3][14] - The yield of fixed-income products has generally declined, influenced by market conditions and inflation expectations [3][15] Break-even Rate Tracking - The break-even rate for banking wealth management products rose to 2.02%, an increase of 1.23 percentage points week-on-week, indicating potential pressure on the products [3][23][25] - The expansion of credit spreads is correlated with the break-even rate, suggesting a need for close monitoring of credit market trends [3][23][24]

Investment Rating - The report does not explicitly provide an investment rating for the banking wealth management industry Core Insights - The report highlights the pressure on bank wealth management product yields due to the stock-bond seesaw effect and seasonal liquidity constraints, indicating a potential long-term decline in yields [4][17] - Regulatory changes are pushing for innovation in financial products to meet household wealth management needs, which is crucial for the banking wealth management sector [10][11] - The report notes that the valuation rectification of bank wealth management products is ongoing, with many institutions completing their mid-year plans by the end of June [11][12] Summary by Sections Regulatory and Industry Dynamics - On June 24, the People's Bank of China and five other departments issued guidelines to support consumption and promote financial products that meet household wealth management needs [3][10] - The valuation rectification of bank wealth management products is a significant focus, with many banks reporting progress in their mid-year plans [11] - As of the end of May, the total net asset value of public funds in China reached 33.74 trillion yuan, reflecting a growth of 6.26 billion yuan from April [12] Yield Performance - For the week of June 23-29, cash management products recorded a 7-day annualized yield of 1.42%, up by 1 basis point, while money market funds reported a yield of 1.32%, up by 2 basis points [4][14] - Most pure fixed income and fixed income+ products saw a decline in annualized yields, influenced by various factors including the stock-bond seesaw effect and geopolitical risks [16][17] Net Asset Value Tracking - The report indicates that the net asset value of bank wealth management products was 0.83%, up by 0.1 percentage points, remaining at a low level [25][26] - Credit spreads have narrowed, indicating limited value, and future trends in credit spreads will be closely monitored as they may impact the net asset value [25][27]

Regulatory and Industry Dynamics - On June 24, the People's Bank of China and six other departments issued guidelines to support consumption, emphasizing the need for innovative financial products that meet household wealth management needs and enhance residents' property income [2][5] - As of May 2025, there are 164 public fund management institutions in China, managing a total net asset value of 33.74 trillion yuan, an increase of 6.26 billion yuan from April [6] Yield Performance - For the week of June 23-29, 2025, cash management products recorded an annualized yield of 1.42%, up 1 basis point, while money market funds reported a yield of 1.32%, up 2 basis points [3][8] - The yield of pure fixed income and fixed income + products generally declined, influenced by factors such as the stock-bond seesaw effect and seasonal liquidity [9][10] Product Innovation and Market Trends - ICBC Wealth Management and China Post Wealth Management participated as cornerstone investors in the IPO of Sanhua Intelligent Control, each acquiring a stake of 20 million USD [7] - The ongoing valuation rectification in bank wealth management is expected to limit product yield potential, as companies shift focus towards low-volatility, high-liquidity assets [10][14]

Core Viewpoint - The banking wealth management industry is undergoing significant valuation rectification, driven by regulatory requirements aimed at standardizing valuation methods and ensuring fair competition among institutions [1][2][3] Group 1: Regulatory Changes - Regulatory authorities have mandated that banks must adopt third-party valuations for wealth management products, eliminating practices such as using closing prices or self-built models [1][2] - A clear timeline has been established for rectification, with half of the required changes to be completed by the end of June and full compliance by the end of the year [1][2] - The rectification process is expected to enhance market order and protect investors' rights by ensuring that product valuations accurately reflect underlying asset values [3][4] Group 2: Impact on Investment Strategies - In response to stricter valuation regulations, banks are adjusting their investment strategies, including shortening the duration of bond investments to mitigate net asset value fluctuations [2][3] - The new rules may lead to increased volatility in product net values, which could pressure risk-sensitive investors and alter their investment behavior [5][6] - The rectification process is likely to create a more competitive environment, with larger institutions potentially gaining market share due to stronger risk management capabilities [6][7] Group 3: Market Dynamics - The rectification is expected to impact the availability of certain assets, as banks may divest from assets valued using closing prices, which could lead to liquidity challenges [5][6] - The current low interest rate environment poses challenges for wealth management products to compete with traditional savings accounts, necessitating a focus on enhancing product offerings and investor education [6][7] - The industry may experience a shift in client preferences, with some investors opting for public bond funds if wealth management products do not differentiate themselves effectively [6][7]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The report highlights a recovery in wealth management growth in April, surpassing the highest point of 2024, with expectations for further growth in May [6][17] - The market share of wealth management is increasingly concentrated among wealth management companies due to stringent regulatory expectations, with small banks actively exiting the market [30][39] - The asset allocation is shifting towards bonds, with a slight increase in the proportion of bonds and non-standard assets, while cash and bank deposits continue to decline [47][50] Summary by Sections 1. Liability Side: Q1 Short-term Fluctuations, April Highs Surpass 2024 Peaks - As of the end of Q1 2025, the wealth management scale was 29.14 trillion yuan, a decrease of approximately 800 billion yuan from the beginning of the year [5][14] - The Q1 end reporting strength decreased year-on-year, but growth resumed in Q2 [19][6] - The best-performing category remains the "minimum holding period" type, which has seen significant growth due to its balance of liquidity and returns [24][5] 2. Asset Side: Passive Increase in Bond Holdings, Valuation Adjustments May Affect Risk Appetite - It is expected that the overall holding will continue to reflect a "decrease in deposits, increase in bonds" trend [47] - The proportion of cash and bank deposits has been declining for three consecutive quarters, while the proportion of bonds has slightly increased to 43.89% [47][48] - The proportion of wealth management supporting the real economy has dropped to below 70% [50] 3. Investment Recommendations - Wealth management subsidiaries of joint-stock banks can consolidate retail customer bases through differentiated advantages, with recommendations for Citic Bank and China Everbright Bank, while beneficiaries include China Merchants Bank and Industrial Bank [8]