(Yicai) April 30 -- China's wealth management market is still poised for steady growth over the course of this year, according to analysts, despite contracting in the first quarter.

As commercial banks’ deposit rates continue to decline, with the interest rates on many fixed-term deposits sliding below 2 percent, wealth management products are expected to attract more and more sustained inflows this year, industry experts believe.

China’s bank wealth management market shrank by about CNY810 billion (USD110 billion) to CNY29.14 trillion (USD4.04 trillion) as of March 31 from Dec. 31, according to a report from the China Banking Wealth Management Registration and Depository Center. Meanwhile, the number of outstanding wealth management products rose to 40,600 from 40,300 in the period.

The decline was mainly due to quarter-end effects, according to Ming Ming, chief economist at Citic Securities.

Ming’s team estimated that the Chinese bank wealth management market scale fell by 3.7 percent or CNY1.1 trillion in March from the month before. In particular, cash management products shrank by CNY334.6 billion, fixed-income products by CNY450.4 billion, and fixed-income products with equity exposure by CNY300.4 billion.

Other experts attributed the decline to other factors, such as adjustments in the bond market. For example, Wang Ziyu, an analyst at China International Capital Corporation, explained that tighter central bank liquidity in the first quarter due to currency pressures and post-year-end bond market corrections weighed on wealth management products’ performance.

China’s average annualized yield of open-end fixed-income wealth management products, excluding cash management products, fell to 2.24 percent as of March 31 from 3.39 percent as of Dec. 31, according to data from comprehensive asset management services provider Puyi Standard.

In April, however, the Chinese bank wealth management market has shown signs of recovery. The scale of the country’s wealth management products has grown faster so far this month compared to the same periods in 2022 and 2023, Wang noted.

Based on historical data from March and April in previous years, China’s wealth management product scale is expected to experience significant growth in April, with the increase likely surpassing the decline caused by quarter-end factors in March, Ming predicted.

The Chinese bank wealth management market expanded by about CNY320 billion in the third week of this month, from April 14 to April 20, compared to the previous seven-day period, according to data from CICC.

The team of Guosen Securities’ analyst Kong Xiang forecast that China’s bank wealth management market will grow by CNY800 billion to CNY1.2 trillion this month from March.

Editor: Futura Costaglione