Jack Ma Ant shrinks the essence of the money market as Beijing goes down

The Ant Group’s money market fund has shrunk to more than four years as users have shifted their money in the face of China’s crackdown on Jack Ma’s payment group.

Funds invested in Ant’s main fund Yu’e Bao fell 18% in the first three months of the year to Rmb972bn ($ 150 billion) as the group pushed users to switch to funds from other suppliers, an asset management subsidiary according to data released by Tianhong on Thursday. The Ant-Alipay payments application is the main repository of money stored by hundreds of millions of users when it was the fund of the money market, when it was the largest in the world.

The fall happened like the Chinese authorities accumulated pressure In Ma’s Internet empire since Ant suspended its initial $ 37 billion public offering, it would be the largest in the world in November. Ma has barely been seen publicly since she was on the list and on the list of regulators fine Alibaba, Ant’s e-commerce sister group, is setting a record $ 2.8 million this month for its anti-competitive behavior.

Ant was ordered to “actively reduce” the size of Yu’e Bao restructuring agreement he clashed with Chinese authorities last week. Regulators have long been concerned about Yu’e Bao’s enormous size, fearing that excessive amortization could pose systemic financial risks.

The key money market fund is managed by Tianhong and reported 690 million investors by the end of 2020.

Alipay users said they have recently received notifications prompting them to relocate their savings.

Constance Zhou, a 28-year-old law firm employee, said she transferred 100,000 Rmb at the end of January after receiving an application notification stating that interest rates were higher with another fund. “I just looked at the difference and transferred,” he said, adding that the investment products of the banks offered better interest rates than Alipay.

Yu’e Bao offered interest rates of more than 6 percent annually when it launched in 2013 by investing in internal assets. But returns have come close to 2 percent in recent months as funds have prioritized safer, more liquid assets, such as bank deposits, and lower interest rates have fallen more broadly.

Kevin Kwek, an analyst at Bernstein Research, said that Yu’e Baok has encouraged users to continue returning to the app, so the “forced restrictions” have reduced the attractiveness.

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

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

Tianhong called the decline in assets a “normal range” and said fluctuations similar to the size of Yu’e Bao had occurred earlier. He added that the fund “operates in a stable manner, and that the decline in scale does not necessarily have to do with the operational risk of the fund.”

Additional report by Nian Liu and Sherry Fei Ju in Beijing