Zenglibao: An Internet Money Market Fund Run by Tianhong Asset Management Co., Ltd.

Abstract

Tianhong Asset Management Co., Ltd., (Tianhong Fund) issued its first quarter report on April 18, 2014. The report announced that the shares of its Tianhong Zenglibao Money Market Fund (Zenglibao Fund) were owned by 81 million individual investors and the value of these shares exceeded 541.3 billion Yuan; the profit in the first quarter was 5.7 billion Yuan. The Tianhong Fund itself had been profitable in 2013. Its annual business income was 350 million Yuan with the net profit of 10.9276 million Yuan. Its total assets by the end of the year were 410 million Yuan, with net assets of 120 million Yuan. The Zenglibao Fund, well-known for its associated Internet asset management platform “Yu'ebao”, had been created just over nine months ago. Yu'ebao triggered an unusual discussion by the government and the public both before and after the NPC and CPPCC; this discussion had not been anticipated by Zhou Xiaoming, the Vice General Manager of the Zenglibao Fund.

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Resources

Appendix I: Monthly Weights of Money Funds in the Fund Market

Source: Wind Information.

Figure

Appendix II:

Weights of Differrent Funds on April 18, 2014

Figure
Details of China's Funds in 2013

Source: Wind Information.

Figure

Appendix III: The Chinese Money Funds' Major Aggregate Indicators

Source: Wind Information.

Figure

Appendix IV: Bank's Financial Management Products

Graph 1: Number and Capital Size of the Chinese Banks' Financial Management Products 2012-2013

Data sources: Bank's Financial Management Product Tracking – December, 2013, contained in Bankers of February 17, 2014.

Figure

193 commercial banks issued a total of 14,000 financial management products in the fourth quarter of 2013 to raise about 9.7 trillion Yuan, increasing by 25.4% and 28.6% respectively compared to the previous quarter. Compared to the same period in 2012, the number and capital size grew by 52.7% and 82.8% respectively. In total 43,000 financial management products were issued by commercial banks in 2013. The capital raised was 28.8 trillion Yuan, achieving a year-on-year growth of 43.4% and 48.5% respectively.

Graph 2: Size and Quantity of Bank's Financial Management Products over the Years

Source: Wind Information

Figure

Appendix V: RMB Lending Rates of Financial Institutions (Unit: Annual Interest Rate %)

Adjustment Time

6 Months

6 to 12 Months

1 to 3 Years

3 to 5 Years

Over 5 Years

Apr. 28, 2006

5.4

5.85

6.03

6.12

6.39

Aug. 19, 2006

5.58

6.12

6.3

6.48

6.84

Mar. 18, 2007

5.67

6.39

6.57

6.75

7.11

May 19, 2007

5.85

6.57

6.75

6.93

7.2

Jul.21, 2007

6.03

6.84

7.02

7.2

7.38

Aug. 22, 2007

6.21

7.02

7.2

7.38

7.56

Sep.15, 2007

6.48

7.29

7.47

7.65

7.83

Dec. 21, 2007

6.57

7.47

7.56

7.74

7.83

Sep. 16, 2008

6.21

7.2

7.29

7.56

7.74

Oct. 9, 2008

6.12

6.93

7.02

7.29

7.47

Oct.30, 2008

6.03

6.66

6.75

7.02

7.2

Nov. 27, 2008

5.04

5.58

5.67

5.94

6.12

Dec. 23, 2008

4.86

5.31

5.4

5.76

5.94

Oct.20,2010

5.1

5.56

5.6

5.96

6.14

Dec. 26,2010

5.35

5.81

5.85

6.22

6.4

Feb.9, 2011

5.6

6.06

6.1

6.45

6.6

Apr. 6,2011

5.85

6.31

6.4

6.65

6.8

Jul. 7, 2011

6.1

6.56

6.65

6.9

7.05

Jun. 8,2012

5.85

6.31

6.4

6.65

6.8

Jul. 6, 2012

5.6

6

6.15

6.4

6.55

Source: Peking University Center for Legal Information (www.pkulaw.cn).

Appendix VI: RMB Deposit Interest Rate of Financial Institutions (Unit: Annual Interest Rate %)

Adjustment Time

Current Deposit

Fixed Time Deposit

3 Months

6 Months

1 Year

2 Years

3 Years

5 Years

August, 19, 2006

0.72

1.80

2.25

2.52

3.06

3.69

4.14

March 18, 2007

0.72

1.98

2.43

2.79

3.33

3.96

4.41

May 19, 2007

0.72

2.07

2.61

3.06

3.69

4.41

4.95

July 21, 2007

0.81

2.34

2.88

3.33

3.96

4.68

5.22

August 22, 2007

0.81

2.61

3.15

3.60

4.23

4.95

5.49

September 15, 2007

0.81

2.88

3.42

3.87

4.50

5.22

5.76

December 21, 2007

0.72

3.33

3.78

4.14

4.68

5.40

5.85

October 9, 2008

0.72

3.15

3.51

3.87

4.41

5.13

5.58

October 30, 2008

0.72

2.88

3.24

3.60

4.14

4.77

5.13

November 27, 2008

0.36

1.98

2.25

2.52

3.06

3.60

3.87

December 23, 2008

0.36

1.71

1. 98

2.25

2.79

3.33

3.60

October 20, 2010

0.36

1.91

2.2

2.5

3.25

3.85

4.20

December 26, 2010

0.36

2.25

2.5

2.75

3.55

4.15

4.55

February 9, 2011

0.40

2.60

2.80

3.00

3.90

4.50

5.00

April 6, 2011

0.50

2.85

3.05

3.25

4.15

4.75

5.25

July 7, 2011

0.50

3.10

3.30

3.50

4.40

5.00

5.50

June 8, 2012

0.40

2.85

3.05

3.25

4.10

4.65

5.10

July 6, 2012

0.35

2.60

2.80

3.00

3.75

4.25

4.7

Source: Peking University Center for Legal Information (www.pkulaw.cn).

Appendix VII: Notice of the People's Bank of China on Lowering the RMB Deposit Reserve Ratio on May 12, 2012 (Yin Fa [2012] No. 122)

The People's Bank of China decided to lower the RMB deposit reserve ratio as of May 18, 2012, both to strengthen pertinence and flexibility of macro-control and also to promote reasonable and moderate growth of monetary credit. Relevant matters are hereby notified as follows:

  • Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank of China implementing 20.5% as the deposit reserve ratio will implement 20% as the deposit reserve ratio.
  • Agricultural Development Bank of China, joint-stock commercial banks, city commercial banks, rural commercial banks and relevant foreign financial institutions implementing 18.5% as the deposit reserve ratio will implement 18% as the deposit reserve ratio.
  • Financial companies implementing 15.5% as the deposit reserve ratio will implement 15% as the deposit reserve ratio.
  • Rural cooperative banks implementing l5% as the deposit reserve ratio will implement 14.5% as the deposit reserve ratio. Rural cooperative banks with assets in small scale and high-level agriculture loans implementing 14% as the deposit reserve ratio will implement 13.5% as the deposit reserve ratio.
  • City credit cooperatives and finance leasing companies implementing 15% as the deposit reserve ratio will implement 14.5% as the deposit reserve ratio.
  • Rural credit cooperatives and rural banks implementing 14.5% as the deposit reserve ratio will implement 14% as the deposit reserve ratio. Rural credit cooperatives (Class A) and village banks with assets in small scale and high-level agriculture loans implementing 13.5% as the deposit reserve ratio will implement 13% as the deposit reserve ratio.
  • Lower 0.5 percentage of the deposit reserve ratio at current levels of local corporate financial institutions in earthquake stricken areas including Sichuan and Yushu.

The Shanghai headquarters of the People's Bank of China and all branches shall make the deposit reserve ratio adjustment in strict accordance with relevant provisions and ensure the smooth implementation and shall report to the head office in a timely fashion in case of a major emergency.

The Shanghai headquarters of the People's Bank of China and all branches shall forward this Notice to local city commercial banks, rural commercial banks, rural cooperative banks, city credit cooperatives, rural credit cooperatives, rural banks, financial companies, Finance leasing companies and relevant foreign financial institutions.

Appendix VIII: Trend in Shanghai Interbank Offered Rates (Shibor)

Source: www.shibor.org

Figure

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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