Yuan savings at Chinese banks in Shanghai dropped last year
despite a recovery in the fourth quarter as people moved funds to
the stock market, the central bank said yesterday.
Whole-year yuan savings dropped 2.94 billion yuan (US$404.5
million) last year from 2006's yuan savings growth of 106.52
billion yuan, the Shanghai headquarters of the People's Bank of
China said yesterday.
"Yuan savings at Chinese banks have fluctuated strongly in line
with the performance of the stock market," it said.
The benchmark Shanghai Composite Index more than doubled in the
first 10 months of last year to crack the 6,000 level from 2,728 at
the beginning of the year.
The bull stock market and the temptation of huge profits
prompted depositors to shift their savings to try their luck in the
stock market. Also a real negative interest rate did not help
people to keep their bank savings.
When the index started to correct from October, some capital
returned to the savings accounts on profit-taking and concerns of a
possible crash.
Other drivers causing funds to flow back to banks include a
correction in the property market, less frequent issues of new
shares and the faster pace of interest rate rises.
About 56.16 billion yuan were placed at banks as savings in
December which saw a high growth for a single month in nine
years.
However, foreign currency deposits at Chinese banks dropped due
to the quicker appreciation of the yuan.
Foreign exchange deposits at Chinese banks fell US$2.41 billion
last year after a rise of US$3.4 billion in 2006.
Yuan deposits at overseas banks in Shanghai soared last year as
several of them started to be locally incorporated in China from
April. The local incorporation status allows them to tap unlimited
retail yuan market.
Newly added yuan deposits at overseas banks topped 55.09 billion
yuan last year in Shanghai, up 27.35 billion yuan from a year
ago.
Overseas banks also took a bigger share of the yuan lending
market last year.
(Shanghai Daily January 10, 2008)
