23 September 2018

Liquidity shortage hits bond funds, paper says

Bond funds are suffering from a cash crunch and falling returns amid fierce competition from high-yield products such as Yu E Bao, a money market fund promoted by Alipay, the online payment service of Chinese giant Alibaba, Shanghai Securities News reported Thursday, citing industry sources. An open-ended bond fund launched by AXA SPDB Investment Managers, has lost more than 2 percent of its net value, the biggest fall in a single day, the report said. This is rare for bond funds which are usually risk shelters, it said. Redemptions hit 16 billion yuan (US$2.6 billion) in the first three quarters in contrast to the explosive growth of Yu E Bao-like products. Meanwhile, Yu E Bao is delivering yields of more than 5 percent which will force bond funds to invest in higher-yield securities, the report said.

– Contact HKEJ at [email protected]



EJI Weekly Newsletter

Please click here to unsubscribe