Alibaba’s Yu’e Bao becomes world’s largest money market fund – China business and technology news from April 28, 2017
A summary of today’s top news in Chinese business and technology. Part of the daily The China Project news roundup "It’s the financial system, stupid."
Yu’e Bao 余额宝, an investment product of Alibaba’s payment affiliate Ant Financial, has surpassed JPMorgan Chase’s U.S. government market fund of $150 billion to become the world’s largest money market fund, reaching a total amount of $165 billion. Launched in 2013, Yu’e Bao, which means “leftover treasures” because it was originally promoted as a way to invest money left over from online payments, now has more than 260 million users. The vast majority of Yu’e Bao users are under the age of 30.
China’s money market fund industry, which is only a decade old, has been growing rapidly, driven by high demand for online funds managed by internet companies such as Alibaba, Tencent, and Baidu, the Financial Times reports (paywall). Unlike traditional banks, which usually offer an interest rate of 0.35 percent a year for an ordinary demand deposit in a savings account, Yu’e Bao (link in Chinese) offers an annualized seven-day yield of 3.96 percent to investors. There’s no minimum amount, and customers can withdraw their cash anytime. The company says that more than 70 percent of individual Yu’e Bao accounts have balances of less than 1,000 yuan ($145) while 15 percent have less than 10,000 yuan ($1,450).
More than 64 percent of the funds that Yu’e Bao invests go into bank deposits, while the rest are short-term investments, policy bank bonds, company bonds, and interbank deposits, according to Caixin.
-
Chinese train maker CRRC’s profits derail in first quarter / Caixin
China’s top train maker, CRRC Corp. Ltd., said that due to a drop in production amid tepid domestic demand for locomotives, both its revenue and profits fell by double digits in the first quarter. -
Meet the Google alum who created China’s Facebook-Groupon mashup / Bloomberg
Colin Huang’s company, Pinduoduo, is a social network for discount shopping worth more than $1.5 billion. -
Top Foxconn executives visit White House, but mum on details / Reuters
“When asked how much money he plans to invest, [Foxconn’s CEO] said he wanted that to be a White House announcement,” likely in the summer or “maybe a few weeks” from now. - BP sells share of SEECO for $1.68 billion / Caixin
- Trump wedge divides India and China / Bloomberg
- U.S. invests too little, not too much in China / Financial Times (paywall)
- New Balance court ruling in China is rare win against piracy / NYT (paywall)
