China is said to plan curbs on money-market funds


BEIJING • China plans to cap the amount that investors can redeem from money-market funds on a single day, according to people familiar with the matter.

The limit for same-day redemption will be set at 10,000 yuan (RM6,194), said the people, who asked not to be identified as they’re not authorised to speak publicly.

The same cap will also apply when investors use their assets in money-market funds directly for payment and consumption, the people said.

The People’s Bank of China (PBoC) and the China Securities Regulatory Commission didn’t respond to faxes seeking comment on the matter yesterday.

The move shows regulators are stepping up efforts to ward off risks by making forays into areas that used to be seen as less risky.

The country’s money-market funds expanded to a total value of almost US$1.1 trillion (RM4.32 trillion) by the end of 2017, up from US$680 billion in the previous year, according to the Asset Management Association of China.

Some Chinese money-market funds allow investors to use the money that they hold in the fund directly for purchasing in online and offline stores, such as the Ant Financial-controlled Tianhong YuE Bao Money Market Fund, China’s largest such entity.

The PBoC revised the statistics methodology for calculating the M2 broad money supply last month to better gauge the scale of money market funds. — Bloomberg