The Asset Management New Rules transformed bank wealth management from “quasi-deposit (implicit guarantee · capital-protected with fixed returns)” into “agency management (NAV-based · buyer beware)”; understanding this fundamental transformation, using the underlying assets to see through risk, and matching products or substitutes to one’s own risk appetite is the core operational framework after the reforms.
The Framework As It Stands
This section is compiled from research drafts: the original framework’s structure, terminology, and key formulations are preserved, including editorial bridging and supplementary factual annotations; diagrams are drawn by the compiler following the original text’s structure.
Preamble — Bank-stock investment value (international perspective): After 2010, the Shanghai Composite’s dividend yield reached a level comparable to the S&P 500 and superior to the Japanese equity market; Chinese equity valuations (P/E) stand at a very low level among major large economies. After 2008, the correlation coefficient between the Shanghai Composite and the S&P 500 was only 0.3-something (with 0.5 as the dividing line, below 0.5 is low correlation), so international investors allocating to Chinese equities can diversify risk effectively; bank-stock dividend yields are also above the A-share market average, which is why foreign capital flows in during Q4 and Q1 every year to buy bank stocks and collect dividends (data as of the approximately-2019 lecture date).
Four core changes under the Asset Management New Rules:
| Dimension of change | Old regime (implicit guarantee) | Post-reform (NAV-based) |
|---|---|---|
| ① Redemption method | Rigid repayment: projected 5%, exactly 5% at maturity, regardless of what happened during the investment process | Final return depends on actual investment result; may be above or below projection; in extreme cases principal may also be lost |
| ② In-period return | A straight line: return unchanged throughout the holding period | NAV-based: fluctuates with changes in underlying assets every valuation cycle (daily / weekly valuation, etc.) |
| ③ Client-side presentation | Projected-return type (fixed X%) | Performance benchmark: only historical figures are disclosed; fluctuates with each valuation cycle |
| ④ Substantive nature | Quasi-deposit (capital-protected with fixed returns) | Depends on actual investment result (no capital guarantee, no return guarantee) |
The four changes are different interfaces of the same substance — bank wealth management reverts from “quasi-deposit / implicit guarantee” to “agency management (seller fulfils duty of care; buyer bears risk).”
Distinguishing old and new products: During the transition period (described at the time of the lecture as before 2020): “old products under old rules, new products under new rules”; the distinction method is to look at the language — old products say “projected return rate X%,” new products say “performance benchmark,” which can only disclose historical data and cannot promise the future; the lecture’s presentation point indicates that after 2020 all products converted to new products (note: the actual regulatory transition deadline was extended to end-2021).
No need for excessive alarm — the underlying-asset transparency method: the main category of bank wealth-management products is fixed-income products — not high-risk; as long as the underlying assets invested in by the trustee do not default, principal and average market return can still be obtained. Conceptually, treat bank fixed-income products like bond funds / money-market funds, and equity-type products like equity funds — breaking the implicit guarantee does not mean universal losses; what matters is whether the underlying assets default.
Substitutes for low-risk-appetite investors: For investors who still need capital protection with guaranteed returns, substitutes include:
- Large-denomination certificates of deposit: substantively deposits; legally permitted to guarantee capital and returns
- Over-the-counter bonds (Treasury bonds, local-government bonds, railway bonds, policy-bank financial bonds): cannot formally state “capital guaranteed with fixed returns,” but the underlying assets themselves carry extremely low risk; return of principal poses no problem, and achieving the normal return of the underlying assets also poses no problem
flowchart TD A[Asset Management New Rules substance: implicit guarantee → NAV-based<br/>quasi-deposit → agency management · seller fulfils duty · buyer bears risk] A --> B[Four changes: break implicit guarantee / NAV-based / performance benchmark / no capital or return guarantee<br/>Four are four interfaces of the same substance] B --> C[Old/new distinction: old product = projected return rate / new product = performance benchmark<br/>Lecture presentation point: all convert to new products after 2020] C --> D[No need for excessive alarm<br/>Fixed-income products dominant · underlying assets not default → principal + average return still obtained<br/>Fixed-income = treat as bond fund / money-market fund · equity = treat as equity fund] D --> E{Route by risk appetite} E -->|Can accept NAV fluctuation| D E -->|Still need capital protection with guaranteed returns| F[Substitutes<br/>Large-denomination CDs = deposits legally guaranteed capital<br/>Over-the-counter bonds: Treasury / local-govt / railway / policy-bank — underlying assets extremely low risk]
Selection checklist:
| # | Core question | Judgment criterion |
|---|---|---|
| 1 | Old product or new product? | ”Projected return rate” vs. “performance benchmark” |
| 2 | What are the underlying assets? | Fixed-income → bond fund / money-market fund mindset; equity → equity fund mindset |
| 3 | Can NAV fluctuation be accepted? | In extreme cases principal may be lost — if not acceptable, look at substitutes |
| 4 | Need capital protection with guaranteed returns? | Large-denomination CD (deposit / legally guaranteed capital) or over-the-counter bonds (underlying assets extremely low risk) |
Compiler’s Perspective
Coordinates: Category = Banking & Real Estate, axis_h = Shu, axis_v = What It Is
Connection layer:
The sharpest point of this framework is the “underlying-asset transparency method”: it uses “whether the underlying assets default” in place of “whether the product nominally guarantees capital” as the risk-assessment standard. The concrete error of the old path: bank wealth management labelled “projected return 5%” → the investor treats it as equivalent to a deposit with capital guarantee → when the implicit guarantee is broken, panic follows and investors exit. This panic mislocates the source of risk — the correct question is “will the fixed-income instruments it invests in default?”, not “does this product have the words ‘capital guaranteed’ in it?” At the action level, the most common error investors made under the old mindset during panic periods was indiscriminate redemption of fixed-income wealth-management products — the framework points out that this is equivalent to treating a bond fund as a deposit and incurring unnecessary liquidity losses through misjudgment.
The structural characteristic of the four changes: they are not four independent modifications but four projections — onto the interfaces of redemption method, in-period return, client-side perception, and substantive nature — of a single underlying change (the legal substance of agency management reverting to its proper form). Understanding this upgrades the analyst from “memorizing rules” to “understanding the logic.”
Large-denomination CDs and over-the-counter bonds protect principal through different paths: large-denomination CDs rely on the legal repayment obligation under the Deposit Insurance Regulations (principal + interest combined ≤ ¥500,000), which is a legal-institutional floor; over-the-counter bonds rely on the extremely low default probability of the underlying assets themselves (Treasury bonds / local-government bonds / railway bonds / policy-bank bonds), which is a credit-quality floor — the two paths must not be conflated, nor equated with “the product promises capital protection”; both achieve substantive capital protection by sidestepping the promise.
From the vantage point of What You See Is Not What Is Real — Belief Is More Useful Than Truth: the “projected return X%” that investors saw was never the actual investment result; it was the interface through which banks, under the implicit-guarantee regime, absorbed and concealed risk on the investor’s behalf; the Asset Management New Rules made risk visible instead of hidden. Here “belief is more useful than truth” is used inversely: believing in “capital protection” was temporarily useful in the past — right up until the implicit guarantee became unsustainable. The increase in visibility does not mean risk has grown; it means information has been restored.
Proprietary increment: the Shanghai Composite’s post-2010 dividend yield being comparable to the S&P 500, and the Shanghai–New York correlation coefficient of only 0.3-something, together generate a structural inference: the allocation value of bank stocks derives from the simultaneous presence of three factors — “high dividend yield × low valuation × low correlation” — not any single dimension. Old analyses that look only at P/E or only at dividend yield will systematically underestimate the appeal of bank stocks during periods when all three factors are aligned.
See Also
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Asset-Management Products and Reserve Redistribution: Breaking Beyond the Two-Tier Banking System
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Bank Entity Liquidity Risk: The Two-Dimensional LCR and Asset-Quality Judgment
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Monthly Bond Market Liquidity Tracking: The Six-Item Excess Reserve Framework
-
The Equity Financing Shortfall: Full Life-Cycle Matching and Six Diversified Arrangements
Sources
- Compiled draft z-0120 · recorded 2026-07
- Domestic banking industry public course (recorded approximately 2019): methodology for selecting bank wealth-management products after the Asset Management New Rules