Residents' Savings Deposits Flow to Bonds, Stocks

Chinese financial experts in Beijing believe that the money not going into savings accounts has instead flowed into treasury bonds, stocks, and consumer goods.

According to the National Bureau of the Statistics, the savings deposits of urban and rural residents at the end of June stood at 6.2 trillion yuan, up 348.7 billion yuan from the beginning of this year.

However, the increase was 231.7 billion yuan less than that of the same period in 1999.

Financial experts pointed out that seven successive interest rate cuts for deposits has prompted some Chinese to invest in treasury bonds and stocks, and others to withdraw their money from accounts to buy housing or consumer products.

Historically, most Chinese have tucked their earnings into savings accounts on a regular basis, partly due to a lack of investment channels.

A sample survey of the People's Bank of China indicated that the number of urban residents who choose to demand deposit increased from 56.3 percent in the first three months of this year to 58 percent in June.

At the same time, 10.9 percent and 9.2 percent of the depositors invested in treasury bonds and stocks respectively.

The numbers indicated 2.6 percentage and 1.6 percentage rises over the first three months.

In fact, the issuing of 50 billion yuan and 60 billion yuan in treasury bonds in March and May was warmly welcomed by investors, and 90 percent of the treasury bonds were sold out within two weeks because of the higher interest rate than that of savings deposits.

The stock market was also quite brisk in the first half of this year; between January and June, the total trading volume of China' s two stock exchanges was more than the whole of 1999.

By June 30, the combined trading volume of A-shares in the Shanghai and Shenzhen bourses reached 3.47 trillion yuan, up 12 percent from that of 1999.

Statistics show that the two exchanges registered over 500 billion investors at the end of June, 100 billion more than a year ago.



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