Yuebao was launched by Alibaba two years ago. (Photo : www.wantchinatimes.com)
According to the Beijing Business Today, online investment product Yuebao has yielded declining returns, posting a recent 3 percent from a high of nearly 7 percent.
E-commerce giant Alibaba launched the product, which is considered as the kick-starter of China's Internet financial services, on June 13, 2013.
Since Yuebao's unveiling, it has allowed users of Alipay, Alibaba's payment service, to invest money in their accounts to a money market fund which offered back then a seven-day annualized returns of more than 4 percent.
The reports noted that it was in Jan. 2014 when the product posted a record-high of 6.763 percent. The increase came as China's interbank lending rates surged.
However, the returns have dwindled since 2015 commenced and posted below 3 percent in late September, a first for Yuebao.
Products akin to Yuebao which were launched by Alibaba's rivals Tencent and JD.com also saw a decrease in returns, dropping to around 3 percent.
For analysts, the situation can be traced from China's move to ease its monetary policy. Since April of this year, the central bank has already introduced five interest rate cuts.
Jian Financial Information analyst Ma Yongjing noted that the trend of money market returns is now generally downward.
Ma additionally remarked that the returns of Yuebao saw greater impact from the interest rate cuts as more than 70 percent of the money market fund is held in bank deposits and reserves.
Ma also said that those Yuebao-like products which saw higher returns are those who have a higher percentage of investments in bonds.
