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Network to networks, finance to finance: the four reasons behind Yu’E Bao slump under 5

余额宝

Abstract: 7 days’ annualized yield of Yu’E Bao was below 5, its halo of high yield was no longer there. The innovation of Yu’E bao was mainly on the channel and the user experience, that’s the reason why it had gotten the support of small amount financing users in such a short time, however, it is essentially a monetary fund, and has to follow the market's universal law of value.

Also in May, 7 days’ annualized yield of Yu’E Bao fell below 5%. According to data released by Tianhong Fund, on May 11, 7 days’ annualized yield of Yu’E Bao was 4.985%, and fell below 5% for the first time. Then on May 12, it again fell to 4.969%, it was the seventh straight down, and disappointed some fans a lot. Zhou Han, the founder and CEO of Rongdao Network, said the innovation of Yu’E Bao is mainly on the channel and the user experience, so it has gotten the support of small financial users in the short term, but in essence, it is still a monetary fund, and has to follow the market's universal law of value. From the industry level, among the top ten monetary fund yield in 2013, the highest ICBC Credit Suisse’s currency net growth rate was 4.38%; The Top 5, Nanfang Cash ZengLi A, Huaxia Cash ZengLi A, Huaxia Currency A, Wanjia Currency A’s net value respectively increased by 4.36%, 4.32%, 4.28%, 4.22%, Yifangda Currency A, ranking the top 10 place, is 4.17%. In 2013, the average yield of 61 monetary funds is only 3.86%. By the end of 2013, more than half a year's yield of Yu’e Bao was 2.8724%, it was fairly good yield. Otherwise, it is not a normal and reasonable requirement to keep 7 days’annualized yield of Yu’E Bao more than 5%. Just for investors of Yu’E Bao, because of the suspense of an annualized yield of 8% up sent by Baidu Baifa which leads to huge psychological gap after the "break of 5". Relatively loose currency market demand Actually the most important factor of short-term monetary fund annual yield is market demand for money, it is well known that banks in China have a LDR assessment principles, the bank is always in big demand for short-term money at the end of the month/season/year, it leads to the surge of interbank offered rate (shibor). On June 20th last year, financing overnight lending rate has reached 13.4440%. In April of this year, Shibor overnight interest rates basically remain at around 2-2.5%, the overall market liquidity is still relatively loose. The domestic lending interest rate which was always high above began to fall, according to the latest April data from 382 monitoring stations in Wenzhou area, the domestic financing synthetic rate index there was 20.18% (equivalent to 1 month’s interest of 1.68 cents), fell by 0.06%, down 0.32% compared with the same period last year, "loan sharks” can no longer be called " loan sharks. And in the financial market, more than 5% of the wealth management products’ quantity proportion has three consecutive month-on-month decline slightly. In April most of the Internet financial product yield is below 5%, in this case, Yu’E Bao naturally could not pay attention to its own moral uplift without thought of others. Zhou Han, the founder and CEO of Rongdao Network, points out, market financing area by the end of June will start to be nervous predictably, then 7 days’ annualized yield should be able to return to 5% or more than 6% when Yu’E Bao meets its first anniversary. The Earning Power of “Baby Bao” becomes weaker Yu’E Bao’s siphon effect makes some Banks and Internet bosses particularly jealous, frequently launch similar products, for example, Tencent launched Licaitong, Baidu launched “Baizhuan”,”Baifa”, Netease launched Cash Treasure, Indurial Bank launched the Shopkeeper Wallet, the Bank of China's Current Treasure, Bank of Communications launched Kuaiyitong, Pingan bank launched Peace Win, Minsheng Bank launched Ruyibao, etc., these products provide more choice space for investers, at the same time make the money start to overflow, a single "baby" earning power began to decline, and affected the bargaining chip of these products to negotiate with banks. Plus on February 25, the China Banking Association held a meeting to study measures and the autonomy of bank deposits, and take documents issued by the association autonomy into consideration that suggest to regard "Yu’E Bao" and other Internet financial monetary fund deposit bank deposits as general management, not interbank deposits. Three head offices of big state-owned commercial banks don't accept trading agreement deposits between their branches and any kinds of money market funds owned by Yu’E Bao such as Tianhong Fund. It makes the Yu’E Bao not being able to get high-interest from these Banks; At the same time, many Banks have also launched their own products, to absorb public deposits in high-yielding directly. This is equivalent to break the balance of Yu’E Bao, yields decrease is also inevitable.

The Management Problem of Tianhong

Of course, as a monetary fund, its income also depends on the level of the management. Tianhong Fund’s management level is not prominent in the fund industry. Round the top in the industry in 2007, Tianhong Fund’s income is only 37.4033 million yuan, profit of 8.8545 million yuan. And more losses in a row after 2010, in 2010 it lost 14.3669 million yuan, the statistics increased to 20.15 million yuan in 2011, and 15.35 million yuan in 2012, although loss narrowed sharply in 2013, it also lost 2.4393 million yuan. Although Tianhong claims that, after working with Ali and adopting large data analysis model, they can explain buy and redemptive law of accurate analysis of the user, such as salary getting at the beginning of the month, credit card paying at the end of the month, the big sale on Taobao, height of online shopping that will be "obvious impacts of the redemption of funds can be conducted on the operating precision to balance the treasure and benefits to achieve the best matching state during the asset allocation period. However, in March of this year, the balance plate has reached 500 billion yuan, seventh in the world's ten biggest monetary funds, the greater the fund plate is, the more difficult management would be. Obviously both Ali and Tianhong didn't foresee such a big size Yu’E Bao becomes. Is the development of large data model still applicable? Can it keep up with the growth of the fund size? Maybe falling yields answered the question. Yu‘E Bao breaks 5, in some extent, taking away the halo of internet financing product, let internet to be internet, finance to be finance. From: The tmtpost

Words translated by CCJK

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