(Yicai) Aug. 1 -- The size of China's wealth management market will continue to expand in the second half and the pressure on interest rates will continue, industry insiders said, after both the market scale and the number of investors increased in the first six months.

More funds are expected to pour into the country’s wealth management market in the near future, but yields will remain under pressure, an industry insider told Yicai. However, as the interest rates are still higher than that of deposits, wealth management products will remain attractive to investors.

China’s wealth management market swelled 12.5 percent at the end of June from a year earlier to CNY28.5 trillion (USD4 trillion), according to a report released by the China Banking Wealth Management Registration and Depository Center on July 30. And the number of investors jumped 6.6 percent from the beginning of the year and 17.1 percent from a year earlier to 122 million.

In the first half, wealth management products were offering an average yield of 2.8 percent, a decline of 0.59 percentage point over the same period last year, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance. They remain an attractive choice to investors and as a result the scale of the market will expand steadily.

However, although the growth of the wealth management market peaked in July, it is likely to slow in the second half. July was a big month for the wealth management market, but it will slow down after that, said Wang Yifeng, chief financial analyst at Everbright Securities.

And yields will remain under pressure. “Recently, bond interest rates have fallen sharply, and this trend may continue in the second half,” an analyst at a Shanghai wealth management company told Yicai. “Wealth management products with a large allocation of bonds may have a lower yield. Also, as bank deposit interest rates tumble, the yield of those products with a lot of deposits will also slump.”

Banks and asset managers should improve their analysis of the macro-economy and the capital markets to provide tailored products and services for investors with different needs, Dong said. They should encourage investors to develop the habit of long-term value investments.

Editor: Kim Taylor