Core Viewpoint - Multiple banks have recently announced early profit-taking on their "target profit" products due to achieving target yield rates, indicating a trend of declining yields in these financial products [2][3][4]. Group 1: Product Performance and Trends - Since July, several banks, including Bank of China Wealth Management and China Merchants Bank Wealth Management, have reported early profit-taking on multiple "target profit" products, with at least 31 products successfully achieving profit-taking this year [2][3]. - The average annualized yield for these products that have achieved profit-taking is around 3%, which is a decline compared to previous years where yields often reached 4% to 5% [2][6][7]. - The majority of the "target profit" products that have achieved profit-taking this year are linked to indices, gold, and U.S. Treasury bonds [2][4]. Group 2: Product Characteristics and Market Dynamics - "Target profit" products are designed to terminate and pay out once a pre-set yield target is reached, which can help investors avoid losses from market volatility [4][6]. - The issuance of "target profit" products has surged since their introduction, with the number of products increasing from 2 in 2022 to an expected 294 in 2024, and the total fundraising amount rising significantly [4][5]. - Currently, 214 "target profit" products are active, with a majority having a duration of 1-3 years [5]. Group 3: Market Conditions and Yield Expectations - The decline in yield rates for "target profit" products is attributed to lower risk-free interest rates and a general decrease in asset yields, leading to a downward trend in performance benchmarks [2][6][7]. - Recent profit-taking targets for these products have also been adjusted downward, reflecting the overall market conditions, with some products seeing target yields drop from 3.25% to 2.40% [7].

Market Overview - The bond market shows a balanced and slightly loose funding environment, with the yield curve steepening. As of June 6, the weighted average of DR007 was 1.53%, and the 10-year government bond yield closed at 1.65% [2] - The Hong Kong stock market performed well last week, with the Hang Seng Technology Index and the Hang Seng Index increasing by 2.25% and 2.16% respectively. A-shares also saw gains, with the Shanghai Composite Index, Shenzhen Component Index, and CSI 300 Index rising by 1.13%, 1.42%, and 0.88% respectively [2] Product Performance - As of June 8, 2025, there were 23,846 active public wealth management products, with 167 having a cumulative net value below 1, resulting in a comprehensive break-even rate of 0.7% for bank wealth management products. The break-even rates for equity and mixed products were 53.85% and 6.76% respectively, while fixed income products had a break-even rate of 0.27% [3] - The break-even rates for fixed income products with a duration of 1-2 years and over 3 years were slightly higher at 0.65% and 0.55% respectively [3] New Product Issuance - A total of 408 wealth management products were issued by 31 wealth management companies from June 2 to June 6, with the majority being R2 (medium-low risk), closed-end net value type, and fixed income public products. Mixed products accounted for 3.6% of new issuances, while no equity products were launched [4] - Pricing trends showed that, except for products with durations of 6-12 months and 1-2 years which saw an increase, other durations experienced a decline in pricing. The pricing for 1-3 month products fell by 19 basis points, while products with a duration of over 3 years dropped to 2.55% [4] - Target profit strategies remain popular among wealth management companies, with a focus on pure fixed income, fixed income +, and bond-mixed products. The majority of new products issued were medium-low risk fixed income closed-end products [4] Performance Metrics - All categories of RMB public wealth management products recorded positive returns last week. The average net value growth rate for fixed income products was 0.0514%, while mixed, equity, and commodity/financial derivative products had average growth rates of 0.1197%, 0.7043%, and 0.2477% respectively [7] - The proportion of negative return products decreased to 4.43%, with fixed income, mixed, equity, and commodity/financial derivative products showing negative returns of 4.13%, 8.86%, 20.59%, and 0% respectively [7] Industry Trends - The valuation rectification in the banking wealth management sector is progressing, with some wealth management subsidiaries having already completed their adjustments. The regulatory requirements mandate the use of standardized valuation methods [8] - Wealth management companies are increasing their focus on "fixed income +" products in response to declining deposit rates. Recent innovations include the launch of "fixed income + non-standard" products and dividend-type wealth management products, aimed at adapting to market changes and optimizing product offerings [9]