(Reuters) China’s banking regulator and main bond clearinghouse have asked commercial banks to reduce rates they offer on high-yielding wealth management products (WMPs), five sources told Reuters, an apparent back-pedalling on commitments to let markets price credit.The move to suppress returns on WMPs would cut the cost of capital for cash-strapped firms relying on the estimated 20 trillion yuan ($3 trillion) industry for costly credit to stay afloat, and reduce the appeal of such products to retail investors, which could boost alternative investments such as Chinese stocks, which have had a dreadful start to 2016.
Chinese Regulator Asks Banks to Cut Wealth Management Yields
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