Analysis of CITIC Securities Asset Management Product Failure Incident
Event Background and Core Issues
On December 25, 2025, Shenzhen Fuanna Home Furnishings Co., Ltd. announced that it had received the first-instance judgment from the People’s Court of Futian District, Shenzhen City, Guangdong Province in the financial entrusted wealth management contract dispute case where the company sued CITIC Securities and China Merchants Bank Guangzhou Branch. CITIC Securities is required to compensate Fuanna for principal losses of approximately 29.3 million yuan, and the subsequent liquidation proceeds from the case will be split 50% each by both parties [1].
This case, which lasted more than three years, exposed deep-seated issues in risk management for brokerages’ fixed-income asset management products. According to the judgment, the ‘Fu’an No.1’ asset management plan purchased by Fuanna from CITIC Securities in 2021 defaulted. As of the end of 2024, the product’s net asset value was only 77.7261 million yuan, far below investors’ expectations. Fuanna has accrued a total impairment amount of 27.9716 million yuan for the overdue unrecovered amount of this product [1].
Analysis of Risk Control Loopholes in Fixed-Income Products
First, insufficient penetration management of underlying assets.
Fixed-income asset management products usually invest in fixed-income assets such as bonds and creditor’s rights. However, some products have defects in penetration management on the asset side, failing to fully identify the actual risk status of underlying assets. In the management of the Fu’an No.1 product, CITIC Securities had obvious deficiencies in risk monitoring and information disclosure of underlying assets, resulting in investors being unable to timely understand the true operation status of the product.
Second, weak liquidity risk management.
Bond market liquidity is affected by multiple factors such as market environment and issuer’s credit status. When systemic risks occur in the market or individual issuers have credit events, fixed-income products may face liquidity crises and cannot liquidate assets in time to cope with redemption pressure.
Third, mismatch between return expectations and risk tolerance.
Some fixed-income products have suitability management issues in the sales link, failing to accurately assess investors’ risk tolerance, leading to a mismatch between product design and investors’ expectations. In this case, CITIC Securities provided product management reports to Fuanna but failed to fully disclose product risks [1].
Strategies to Avoid Risk Control Loopholes
Strengthen penetration review of underlying assets:
Brokerage asset management institutions should establish sound underlying asset warehousing standards and conduct strict credit risk assessments on fixed-income assets to be invested. Focus on core indicators such as the issuer’s financial status, debt-servicing ability, and industry development trends to ensure that the quality of underlying assets is controllable. At the same time, establish and improve the asset duration management mechanism, continuously track and monitor changes in underlying asset risks, and adjust investment strategies in a timely manner.
Improve liquidity management framework:
Establish a multi-level liquidity risk management indicator system, including core indicators such as liquidity coverage ratio and high-quality liquid asset adequacy ratio. Formulate detailed liquidity emergency plans to respond quickly when extreme market conditions occur. Reasonably allocate the asset term structure, avoid over-concentration on long-term varieties, and ensure that products have sufficient liquidity buffers.
Implement investor suitability management:
Strictly implement the investor suitability management system and accurately assess investors’ risk tolerance. Fully disclose product risks in the product sales link to ensure that investors make investment decisions based on a full understanding of product characteristics. Establish a long-term mechanism for investor education to help investors establish correct investment concepts and risk awareness.
Build a comprehensive risk monitoring system:
Use financial technology to establish an intelligent risk monitoring platform to real-time monitor various risk exposures such as credit risk, market risk, and liquidity risk of product portfolios. Establish a risk early warning mechanism to proactively identify and evaluate potential risk factors. Conduct regular stress tests to assess the risk tolerance of product portfolios under extreme market scenarios.
Promote transformation and upgrading of business models:
Traditional fixed-income products are facing pressure from sustained yield declines. Brokerage asset management should actively promote the transformation to a ‘multi-asset, multi-strategy’ model. Based on the traditional fixed-income advantage business, develop the ‘fixed-income +’ business model, enhance returns through allocating equity assets, derivatives and other tools, while strictly controlling downside risks [2]. This transformation helps reduce over-reliance on single fixed-income assets and improve the risk-return characteristics of products.
Implications for Industry Development
The CITIC Securities asset management default case has sounded an alarm for the entire brokerage industry’s asset management business. Against the background of the low-interest rate era, brokerage asset management institutions face the triple pressure of ‘declining asset yields → declining product yields → declining business income’ [2], and must shift from simply relying on bond investment to diversified asset allocation. At the same time, regulatory authorities should further improve the regulatory rules for asset management business, strengthen information disclosure requirements, and promote the standardized and healthy development of the industry.
For investors, when choosing fixed-income asset management products, they should focus on the manager’s investment management ability, risk control level, and the quality of the product’s underlying assets, and avoid only focusing on expected returns while ignoring potential risks.
References
[1] Sina Finance - CITIC Securities Asset Management Defaulted, Ordered to Compensate Nearly 30 Million Yuan (https://finance.sina.com.cn/stock/zqgd/2025-12-27/doc-inheexsp7316994.shtml)
[2] China Fund News - In the Low-Interest Rate Era, This Type of Product is “Booming”! (https://www.chnfund.com/article/ARb4b4de95-7514-d390-4f7f-3a1df44273a3)
