Joe Zhang: Alibaba’s Banking Innovation “Yu E Bao” and it’s Impacts

Read below Joe Zhang‘s insights on Alibaba’s banking innovation “Yu E Bao” and it’s impacts… Joe states in the SCMP article that Chinese lenders are ready to fight back if profitability is threatened.

Joe Zhang

Within just six months, Yu E Bao, the partnership between the mainland’s Alibaba and fund house Tianhong Asset Management, raised 250 billion yuan (HK$318 billion) from millions of little guys to invest in money market funds and treasury bonds.

Other internet companies such as Tencent and are launching similar services.

All of a sudden, the market is euphoric about the beginning of the end of the mainland’s stodgy and bureaucratic banks. After all, these banks are predominantly state-controlled and have never been nice to the little guys.

A sleek new force coming out of nowhere to challenge the entrenched banks is an exciting development.

Except that this is just a story. The reality is it is not easy to move the cheese of the banks. Not yet, at least.


In conclusion, the likes of Yu E Bao are doing mainland savers a great service. Their continued efforts will force the banks to gradually raise the interest rates on short-term deposits, one way or another, with the rate rise being officially sanctioned by the central bank or without.

As a result, the yield curve in the banking sector will experience a parallel shift upwards. In the long term, that means a slowdown of credit growth – and a more rational economy.

His detailed observations can be found here…

Joe Zhang

Joe Zhang is the Chairman of Slow Bull Capital based in Hong Kong, and also author of “Inside China’s Shadow Banking:  The Next Subprime Crisis” and 避開股市的地雷。Zhang was Chairman of Wansui Micro Credit Company in Guangzhou, China, from 2011 to 2012, . He was named “Microcredit Person of the Year” in January 2012 by the Microcredit Association of China.

He started Slow Bull Capital in 2012. Before starting his own business, Zhang worked at investment banks.  He was Deputy Head of China Investment Banking at UBS between 2008-11. From 1999 to  2006, Joe was co-head and head of China Research at UBS Securities Asia Limited. Prior to this, Mr. Zhang worked at the People’s Bank of China between 1986 and 1989. Zhang was chief operating officer of Shenzhen Investment (604 HK), a company listed on the Hong Kong Stock Exchange, between 2006-08.

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