The New York Times wrote last week that "China Investors Flock to Money Market Funds Despite Record Low Yield." The article tells us, "Chinese investors have poured cash into money market funds despite falling yields on the low-risk instruments as authorities enact powerful monetary easing to combat the impact of the coronavirus epidemic. China's biggest money market mutual fund, overseen by billionaire Jack Ma's Ant Financial Group, has seen its yield falling to the lowest since it was launched in 2013. Tianhong Yu'e Bao's 7-day annualized yield dipped below 2% this week and eased further to 1.9670% on Tuesday, according to Tianhong Asset Management Co, the fund's manager." It continues, "But the yield has been steadily declining since the beginning of the year as authorities ensured the banking system had sufficient funds to lower financing costs as they support the slowing economy. But the lower yield has not driven investors away.... Data from the Asset Management Association of China (AMAC), which is supervised by China's securities regulator, showed the value of China's money market mutual funds at 8.08 trillion yuan ($1.14 trillion) at the end of February, accounting for 49.37% of the total size of mutual funds and up about 960 billion yuan from the end of 2019." The Times adds, "China's primary repo rates fell sharply, with the overnight borrowing cost hitting a record low on Tuesday as liquidity in the system remained ample and the central bank unexpectedly lowered the interest rate on financial institutions' excess reserves for the first time since the global financial crisis.... Many market participants expect yields on money market funds to fall further in the short term."

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