Bloom Is Off Alibaba's Yu E Bao Rose

That was quick. Only a month after becoming the largest asset manager in China and days after the yield on its Yu E Bao slipped below 7%, now it turns out the yield on its new product isn't even cash money.

Alipay's New E-Investment Offering 7 Pct Return – Sort Of
Investors in Alipay's new high-yield wealth management product may get part of their returns in shopping bonus points rather than cash, an analyst says.

Alipay, Alibaba's third-party payment arm, says it will start offering the product on February 14. Investors were told to expect a tantalizing annual yield of up to 7 percent, higher than that of Yu E Bao, a popular money market fund investment service that Alipay introduced in late June. The new product is available to Yu E Bao users only.

Total investment in the new product is capped at 300 million yuan, up to 2 million for each investor. Unlike Yu E Bao, the product requires investors to deposit money in an account for one year. Alipay did not say how early withdrawals will affects returns.

Money raised by the service will be used to buy insurance policies issued by Zhujiang Life Insurance Co. in the southern province of Guangdong, which ranks the 46th in the country's 70 insurance companies in terms of value of premiums. Alipay has not disclosed the details of the cooperation.

Several analysts familiar with Alipay said insurance companies' investments normally cannot achieve a return of 7 percent annually. Data from the insurance regulator shows their investment return rates averaged 5.04 percent in 2013. That was the highest rate in four years.

They think Alipay would make up the difference by giving investors Ji Fen Bao, bonus points that can be used to pay bills on Alibaba's e-commerce websites Taobao and Tmall.

Every 100 points of Ji Fen Bao equals one yuan. The bonus points cannot be converted into cash.
Interesting development, to say the least. On the surface it appears negative, but they are a major shopping portal, so there's no shortage of consumers for whom store points are as good as cash.

No comments:

Post a Comment