After the threshold is lowered, how can financial management funds smoothly enter the market? Industry insiders discuss: there are still difficulties, looking forward to detailed policy support.

After the joint issuance of the "Implementation Plan for Promoting the Entry of Medium and Long-term Funds into the Market" by six departments, the market has sparked heated discussions, with banking wealth management professionals also joining the discussion. The "Plan" clearly allows institutions, including banks' wealth management, to participate as strategic investors in the private placement of listed companies, and in terms of participating in new stock subscriptions, listed company private placements, and the criteria for takeover declarations, banking wealth management, insurance asset management, and public funds are given equal policy treatment. Industry insiders generally believe that this "Plan" has comprehensively optimized the qualification recognition for banks' wealth management to participate in the private placement of listed companies, which helps promote the effective connection between medium and long-term funds and high-quality assets, and improve resource allocation efficiency. Some interviewees told Caixin reporters that equity products deployment has become a recent focus point within their respective companies. Easing the threshold: Wealth management funds can directly participate in the equity market A wealth management professional from southern China told Caixin reporters that a major highlight of the above "Plan" is that wealth management can directly participate in the equity market. According to a wealth management professional from a company in eastern China, wealth management funds previously entered the market mainly through brokerage accounts to participate in new stock subscriptions. Due to the high uncertainty of new stock gains and long lock-up periods, the enthusiasm of wealth management companies to participate in new stock investments is low when the stock market is highly volatile. "After the implementation of the 'Plan,' wealth management funds will no longer be restricted from participating in listed companies' private placement projects with lock-up prices. At the same time, in terms of participating in new stock subscriptions, listed company private placements, and takeover recognitions, banks' wealth management and public funds are given equal policy treatment, which means that banks' wealth management will rise to class A investors, which is beneficial for increasing the proportion of new stock allocations," said a relevant person in charge of Everbright Wealth Management in an interview with Caixin reporters. The same wealth management company's management of multiple wealth management products can be considered the same client, which also reduces the threshold for wealth management funds to directly participate in listed company private placements. Pu Yanjie, Chief Equity Investment Officer at Xingyin Wealth Management, also told Caixin reporters that banks' wealth management companies as strategic investors in participating in listed companies' private placements can effectively connect medium and long-term funds with high-quality assets, improve resource allocation efficiency, and help industrial structural transformation and upgrading. There are still challenges: PR3 risk-level and above products face sales difficulties Despite the release of many positive signals in the "Plan," the proportion of mixed and equity products in the remaining scale is shrinking. This situation clearly reflects that wealth management companies still face a series of thorny bottlenecks and challenges in promoting the entry of wealth management funds into the market. A product manager from a wealth management company in southern China pointed out that over 95% of bank wealth management products in the past were low-risk fixed-income products at PR1 and PR2 risk levels. In the current industry landscape, it is difficult to attract wealth management funds into the market without developing PR3 to PR5 equity products. According to industry data, as of the fourth quarter of 2024, the scale of PR3 and above products is still declining. Based on this, the product manager of the wealth management company suggested that policy support for the issuance of PR3 and above wealth management products needs to be more clearly defined. The product manager further analyzed that the bottlenecks for wealth management funds to enter the market are still prominent at present. For PR4 (high risk) and PR5 (very high risk) risk-level wealth management products, which are equity and stock-type products, customers need to visit the counter in person for the initial subscription. Although this requirement ensures that investors fully understand the risks of the products, it significantly increases sales costs and difficulties in practical operation. Moreover, PR4 and PR5 level wealth management products are currently not available for online sales channels which makes it extremely difficult for customers to access them, further restricting the promotion of such products and the pace of wealth management funds entering the market. Deployment intensified: Closed-end long-term wealth management products are the way forward With the release of the "Plan," coupled with the adjustment of valuation methods for financial products leading to increased volatility, many industry insiders believe that both factors point to wealth management companies increasing their deployment of closed-end long-term wealth management products. According to the mentioned wealth management professional from eastern China, if wealth management companies participate in listed companies' private placements as strategic investors, they will face a prominent practical problem: private placements of listed companies usually have long lock-up periods, but the current wealth management products on the market are mostly short-term. Therefore, if wealth management companies want to participate, they need to issue longer-term wealth management products. In addition, currently, investors tend to choose closed-end long-term products because they can effectively lock in investment opportunities in volatile market environments, or choose low-risk PR1 products to ensure the safety of their funds. According to feedback from the industry, the deployment of long-term wealth management products has started. Everbright Wealth Management will study and issue long-term (over 18 months) public fixed-income products with the addition of private placements strategies. At the same time, Everbright Wealth Management will actively enrich its private equity, project financing product system, and explore guiding medium and long-term funds to enter the market investment through private equity special products. The person in charge of Ping An Wealth Management introduced that they will continue to explore more high-quality assets that match medium and long-term fund attributes, gather and strengthen the medium and long-term funds of bank wealth management, and establish a medium and long-term evaluation mechanism. Meanwhile, in the situation where the expected returns of fixed-income assets are declining, the company will further increase the design and investment layout of multi-asset and multi-strategy products, enhance the participation in the equity market, and fully grasp the investment opportunities in the domestic equity market. This article is reproduced from "Caixin Finance," GMTEight editor: Liu Jiayin