Alibaba launched its Yu’e Bao money market fund nine month ago and investors are rushing to invest their ‘leftover treasures’ topping 81 million active trading accounts by the end of February.
Senior Chinese financial officials told the Financial Times that the fund had accumulated at least Rmb500bn ($81bn) in deposits by the second week of March, making it the fourth largest money-market fund in the world. Such a rapid expansion in a sector of the financial system did not exist a year ago has led to warnings that it could pose risks to China’s debt-laden economy.
Jack Ma has pulled another ‘rabbit’ out of his ‘growth hat’. An incredible development, which is shaking up the Chinese banking system. Intense investor interest in Yu’e Bao and copycat offerings, more recently from companies such as Baidu and Tencent, is especially evident from growth in just the past two months.
The Chinese government has so far been supportive of the new phenomenon and appears eager to continue with rapid financial reforms, including interest rate liberalisation and deregulation of the state’s monopoly in the financial sector.
Source: Financial Times