Tencent vs Alibaba
Seven-day annualized return of Yu'ebao and Licaitong (percent)
Source: Compiled by GT
Leading Chinese Internet companies Alibaba Group and Tencent Inc will launch new online asset management products Friday to attract customers, while the seven-day annualized return of their current products dropped after the Spring Festival holidays.
Alibaba and Tencent both announced on their respective official websites the launch of new asset management products on Friday, Valentine's Day.
Alibaba will launch a one-year asset management product Friday, which is exclusively for users of Yu'ebao, Zhang Daosheng, a public relations manager of Alipay, which is the payment affiliate of Alibaba, told the Global Times Tuesday. Yu'ebao is an online monetary fund product offered by Alibaba that was launched on June 13, 2013.
The annual return rate of the new product is expected to be about 7 percent, and users' investment and 2.5 percent annual return at least will be guaranteed, an announcement on Yu'ebao's official website stated.
From February 8 to 13, users of Yu'ebao can book the product online. The website showed that more than 1.6 million users booked the new product.
The company wants to meet different needs of users, said Zhang.
Yu'ebao has attracted a wide range of users, and some of them have the needs to pursue higher return with their idle money, Zhang said.
The seven-day annualized return of Yu'ebao was 6.26 percent Tuesday, and has fluctuated around 6.1 percent after the Chinese Lunar New Year, lower than the average level of 6.7 percent in early January, according to the Yu'ebao website.
Licaitong, the monetary fund product launched by Tencent in cooperation with China Asset Management Co (China AMC), also saw a declining seven-day annualized return.
The return rate after the Spring Festival holidays was around 6.7 percent, lower than that before the holidays which was above 7 percent, according to the website of China AMC.
Many monetary funds make investments in the interbank market and the market no longer faced tight liquidity as it had before the Spring Festival holidays, so the seven-day annualized return decreased, Jin Lin, a banking analyst at Shanghai-based Orient Securities, told the Global Times Tuesday.
Tencent launched its asset management product Licaitong on January 22, which was regarded as a major competitor of Yu'ebao.
News portal qq.com, owned by Tencent, reported Tuesday that Tencent is cooperating with Shanghai-based asset management company Galaxy AMC to launch an index fund product, dubbed "Dingtoubao." The company could not be reached by press time.
Index fund products can bring a higher return rate than monetary fund products but also contain higher risks, Dong Dengxin, director of the Finance and Securities Institute at Wuhan University of Science and Technology, told the Global Times Tuesday, noting that monetary funds can usually keep losses lower than 5 percent but index funds can not.
The online asset management products have attracted customers who have moved their savings from banks, indicating banks may not be able to keep a large amount of the public's savings easily with their low interest rates, Jin said.
Ping An Bank cooperated with China Southern Asset Management Co to launch an online monetary fund product similar to Yu'ebao on October 15, 2013.
This move by Ping An Bank showed it had realized the competition [in attracting the public's investments] and made an appropriate response, Jin said.
Online platforms and banks attract different buyers of asset management products, Dong said.
Banks will still have an advantage in having customers with large capital such as companies but online platforms will be more appealing to individual customers due to convenience, he noted.
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