BEIJING—Chinese investors poured more than $200 billion into trust
investments, the main part of the country's shadow banking system, in the first
quarter, but the industry warned it faces tougher competition as banks and
brokerages encroach on its turf.
The China Trustee Association said Wednesday that trusts, a type of
wealth-management company common in China, had 8.73 trillion yuan ($1.42
trillion) of assets under management at the end of March, up 17% from three
months earlier. That growth was led by financing of infrastructure projects,
which received 461.3 billion yuan of new funding from trusts in the first
quarter, almost five times the amount a year earlier.
With Chinese savers short of good investment options—the country's stock
markets have yet to recover from a 2008 crash and government efforts to curb
property speculation have made it difficult for people to park excess cash in
real estate—trust companies have come to dominate China's wealth-management
sector by giving investors a way to make money through lending to companies
that need cash.
But trusts are now warning that the days of runaway profits may be over
as the government moves to restrict lending in areas where the trusts have been
most active and as new regulations allow other financial institutions to
provide services that were once the primary domain of trusts.
banks, funds, securities companies and third party managers successively entering
the wealth management space, wealth management competition is becoming white
hot," said Beijing-based National Trust Ltd., which isn't publicly traded,
in its recently published annual report.
This article originally appeared in the The Wall Street Journal. To read the full article click here.