Whither Has the Money Gone : Fund Flow and Mechanism Under a Grand Asset Management Framework

This book presents China’s wealth management market to the public, institutions and research groups. As the money base of Renminbi (RMB or Chinese Yuan) from the central bank increases exponentially in recent years, the overall leverage ratio rises in an alarming rate and the shadow banking issues stick out. Where this massive amount goes has raised huge interest all over the world. This book answers this question in three aspects: What is the money made up? Who is managing the money and how are they doing? The author studied six types of financial institutions that are responsible for channeling the money to industries and individuals. Banks although still the main vehicle for money flows, other financial organizations have taken more and more important roles in the money management market. Insurance, trust, security and mutual funds are the main non-banking business participants. New money management products are innovated, as are the regulations. The money management business in China has experience from starting chaos to a regulated market and the evolution is still going on. Professionals and researchers around the world are watching China’s money market closely, studying the mechanisms, looking for business opportunities and trying to theorizing economic rules. This book is a well presented and professionally structured for the above purposes. Foreword Preface Three Questions About Money Whither Has Gone the Money? The Scale and Direction of Money Flow Flow of “Money” and Leverage of Non-financial Corporations The Flow of “Money” and the Leverage of Local Governments and Residents Where Does “Money” Come From? The Distribution of Source “Money” The Source of “Money” and the Leverage of the Financial Sector The Source of “Money” and the Mismatch of Financial Resources Where Should Money go? Case Study in the United States Emerging Industries Need “Money” Emerging Technologies Attract “Money” Contents 1 Analysis of Flow of Bank Wealth Management Fund and Its Mechanism 1 Analysis of Flow of Funds: Non-standard Dominant 1.1 Calculation of Fund Flow: Structured Entities 1.2 Key Indicators: Focus on Self-financing 2 Capital Flow Mechanism: Innovation in Evolution 2.1 Interbank Wealth Management Models: Investment in Non-standard Assets 2.2 Bank-Trust Cooperation Model: Managed Asset Trust 2.3 Bank-Security Channel Business: Substituting Bank-Trust Cooperation 3 Future Outlook: Who Is the Next? Appendix 1 Money Flow Data of Principal-Protected and Non-principal Guaranteed Wealth Management Appendix 2 Overview of Bank Wealth Management Market Development (2004–2017) 2 Interbank Business and Outsourcing Investment 1 Source and Direction of Bank Funds 2 Review of the Development of Interbank Business 3 Bank Outsourcing Scale Measurement 3.1 To Measure the Outsourcing Size of the Bank from the Perspective of the Outsourcing Manager 3.2 Outsourcing Scale of Bank’s On-Sheet Funds 3.3 Outflow of Funds from the Bank 4 Risk Analysis of Bank Outsourcing and Suggestions 3 Analysis of Fund Flow and Mechanism in Trust Market 1 Source and Destination of Trust Funds 2 Trust Fund Investment Mechanism 2.1 Securities Investment Trusts: Targeted Additional Offering Trusts and Umbrella Trusts 2.2 Channel Trusts: Stock Orientation Trust (SOT) Directional Channel Services 2.3 Industrial and Commercial Enterprise Trust: Investment and Loan Linkages and Debt-to-Equity Conversion Model 2.4 Fundamental Industry Trust: Trust Model of PPP Business 2.5 Real Estate Trusts: Property Beneficial Rights Model and Equity Financing Hybrid Financing Model 3 Conclusion and Outlook 4 Analysis of Insurance Funds Utilization Channels and Mechanisms 1 Utilization of Insurance Funds: Dismantling “Other Items” 2 Alternative Investment Model: Non-standard and Interbank 2.1 Non-standard Investment: Debt-Equity-Project-Debt Under Disguise of Equity 3 Interbank Investment: Business Innovation 4 Alternative Investment Development: Legalization 5 Analysis of Funds Flow and Mechanism of Securities Assets Management 1 Sources and Use of Capital for Brokerage Capital Management 2 Analysis of Raised Funds and Investment Mechanism 2.1 Collective Asset Management Business 2.2 Active Directional Asset Management Services 2.3 Channel-Type Directional Asset Management Business 2.4 Special Asset Management Plan 3 Summary 6 Analysis of Capital Flow of Fund Industry and Its Mechanism 1 Fund Industry Overview from 2013 to 2016 2 Sources of Funds and Their Flow 2.1 Source of Funds 2.2 Flow of Funds 3 Analysis of Fund Flow Mechanism 3.1 Fund Circulation Among Financial Institutions Model—Outsourcing Business 3.2 Private Equity Funds and Internet Financial Cooperation Model 3.3 Government Guidance Fund Model 4 Industry Outlook and Policy Suggestions 7 Review and Prospect of Assets Management Market Supervision Policy 1 Management of Chaos and Regulatory Process 1.1 Chaos in the Asset Management Market: Capital “Shifting from Real Economy to Virtual Economy” 1.2 History of Asset Management Market Regulation: Progressive Development 1.3 Supervision of Asset Management Market: Coexistence of “Concentration” and “Imbalance” 2 Segmented Supervision of Current Asset Management Market 2.1 The CBRC Policy System: The Principle of Penetration 2.2 Policy Framework of the Securities Regulatory Commission: Lawful, Strict and Comprehensive 2.3 Policy System of Insurance Regulatory Commission: “Dove Cage” Prototype 3 Supervision Trend of Asset Management Market 3.1 Unified Supervision 3.2 Continuous Supervision 3.3 Tighter Regulation 4 Conclusion: What Kind of Regulation is Needed in the Market? 4.1 Regulatory Framework: Focus on Coordination Mechanisms 4.2 Regulatory Concept: Focusing on Functional Supervision 4.3 Regulatory Tools: Introducing Regulatory Sandboxes