Jack Ma’s ant shrinks the money market fund as Beijing collapses

Ant Group’s money market fund has shrunk to a three-year low as users shifted their cash in the face of China’s crackdown on Jack Ma’s payment group.

Funds invested in Ant’s Yu’e Bao flagship fund fell 18% in the first three months of the year to Rmb972bn ($ 150 billion) as the group pushed users to switch to other suppliers, according to data released Thursday by its Tianhong. Asset Management Subsidiary. The money market fund, which was the largest in the world, acts as the main surplus cash deposit stored by hundreds of millions of users of Ant’s Alipay payment app.

The fall came just as the Chinese authorities have done stacked pressure in Ma’s Internet empire, since abruptly stopping Ant’s initial $ 37 billion public offering, which would have been the largest in the world, in November. Ma has barely been seen in public since the list was deleted and regulators fine Alibaba, Ant’s sister e-commerce group, is recording $ 2.8 billion in anti-competitive behavior this month.

Ant was ordered to “actively reduce” Yu’e Bao’s size as part of a restructuring agreement hit with Chinese authorities last week. Regulators have long been concerned about Yu’e Bao’s immense size, fearing that a series of redemptions could cause systemic financial risks.

Tianhong manages the flagship money market fund and reported 690 million investors by the end of 2020.

Alipay users said they had recently received notifications encouraging them to change their savings elsewhere.

Constance Zhou, a 28-year-old law firm employee, said she transferred 100,000 Rmb in late January after receiving a notification to the app that revealed higher interest rates with another fund. “I looked at the difference and transferred it,” he said, adding that banks ’investment products offer better interest rates than Alipay.

Yu’e Bao offered annual interest rates in excess of 6% when it launched in 2013 by investing in assets, including bonds. But yields have come close to 2% in recent months, as the fund has prioritized safer, more liquid assets such as bank deposits and as interest rates fell more broadly.

Kevin Kwek, an analyst at Bernstein Research, said Yu’e Bao encouraged users to keep coming back to the app, so a “forced downsizing” reduced its appeal.

Ant had already been moving away from marketing its own financial products to serve as a platform for other groups to access. huge customer base. The Yu’e Bao platform trades more than two dozen money market funds from third-party asset managers.

Yu’e Bao is part of Ant’s investment business, which earned Rmb11bn in the first six months of last year, or 16% of the group’s total.

Tianhong described the fall in assets “within the normal range” and said similar fluctuations in Yu’e Bao’s size had previously occurred. He added that the fund “was functioning stably and that the decline in scale is not necessarily related to the operational risk of the fund”.

Additional reports from Nian Liu and Sherry Fei Ju in Beijing