BEIJING - Online money market funds (MMFs) are losing their appeal to Chinese investors who crave higher yields in the stock market.

Combined assets of online MMFs totaled 1.36 trillion yuan ($222 billion) at the end of the first quarter, down 9.8 percent from the previous quarter, according to data from Beijing-based lending information provider Rong360.com.

The figure was a sizable reduction compared to a peak of 1.56 trillion yuan at the end of September 2014.

Analysts said a bullish stock market has drawn money away from online MMFs.

The benchmark Shanghai Composite Index has gained more than 30 percent since the start of this year, accompanied by a frenzy of new accounts and record turnover.

Rong360.com analyst Xu Jin said that a huge amount of capital has flowed out of bank deposits and online MMFs into the stock market, feeding the market's steady climb.

Online MMFs offered annualized interest rates of nearly 7 percent when they first became popular in 2013, but the current rate has fallen to around 4 percent, another reason they have lost their allure, according to Xu.

The falling yields accompanied two interest rate cuts and two drops in banks' reserve requirement ratio by the central bank since November of last year.

Despite the general decline, Alibaba's Yu'e Bao, the most popular and largest online MMF, was an exception. Its first quarter report showed assets had reached 712 billion yuan as of the end of March, up 23 percent from three months ago.

Alastair Sewell, Senior Director of Fund & Asset Manager Ratings at Fitch Ratings, said the relative ease and convenience of online MMFs have made them wildly popular and a key wealth management tool for average investors.

Yu'e Bao can be used for online purchases, taxis, credit card payments, mortgage payments, and even utilities such as water and electricity. It also offers instant redemption and no-fee money transfers between bank accounts.

However, Sewell warned that online MMFs have a less stable investor base with yield-hungry retail investors susceptible to herd behavior, which could result in a mass outflow of funds.