Internet finance regains popularity amid volatile stock market

BEIJING - Internet finance is resurging following a bullish run that drew users investors away with the lure of bigger returns.

With several large Chinese companies announcing new programs and worries of fluctuation in the stock market, big and small investors are returning to the seemingly more solid Internet finance services.

Internet finance services like Yu'e Bao, one of the most popular started by e-commerce titan Alibaba, allow users to deposit savings or borrow money and are usually backed by one or several money market funds (MMF).

First cropping up in 2013, a drop in assets and yield rates pushed many users to invest in the stock market for better returns in the fourth quarter of last year.

But interest seems to be renewed after a string of big announcements.

On Monday, China's biggest homegrown smartphone maker Xiaomi launched its Huoqi Bao service, which allows users older than 18 years to make pocket-money sized deposits in an MMF run by investment firm E-funds.

Huoqi Bao's annualized yield rate was 4.92 percent on Tuesday and that of Yu'e Bao is 4.27 percent. Xiaomi is now offering bonuses and gifts to lure users.

"Although there are quite a number of Internet finance platforms, the burgeoning sector remains at an early stage," said Wang Anquan, head of Xiaomi's financial business branch, who worked for Alibaba's financial services.

One of the most popular domestic brands and host to the third-largest e-commerce platform, Xiaomi sold 61.12 million smartphones in 2014 and is now marketing smart wrist bands.

Xiaomi co-founder Hong Feng said his company has accumulated huge user data and knows their habits well. "Therefore, we can target them more accurately," said Hong.