China's domestic commercial banks are now able to directly invest in the Shanghai and Shenzhen stock markets. The recently-announced rules have stirred investor's enthusiasm for more stock-related wealth management products.

China's market regulators want to cut out the middleman. By removing the need for banks to go through brokerages or trust funds in order to get exposure to stocks, the regulators want to make their equity investments cheaper and more transparent. But banks said they'll need time to digest the changes before diving directly into equities. 

“New regulations don't necessarily promise immediate capital flows into equities since there are other specific rules yet to be implemented. Even if banks have no hurdles to investment, there will not be heaps of money flowing into the stock markets. Banks' wealth management products still prefer investments with low risks and stable returns,” said Xu Wenbing, chief banking analyst at the Bank of Communications.

Chinese investors who are buying wealth management products from Chinese banks are those who favor more stable assets. Unlike domestic banks, foreign-owned banks in China have been distinguishing themselves in stock markets, bonds, and commodities for years. 

“Foreign-funded banks have two advantages. Rirst, they know how to design such products since they've issued products related to crude oil, gold and overseas stock indexes. Second, their customers are more willing to take high risks than domestic investors,” said Yang Zhongning, investment consultant of Industrial Securities.

Yang suggested that once domestic banks become new market players, they should target stocks with higher dividends. 

For the moment, the number of stocks which promise a dividend rate of over two percent accounts for 35 to 40 percent of the CSI-300 index of Shanghai and Shenzhen's biggest listed companies.