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Cooling shares boost savings
By Chen Weihua
Updated: 2007-07-11 06:46
The rocky stock market has helped put a stop to fleeing bank savings in
Shanghai.
Household savings in Chinese financial institutions in the city increased
by 6.09 billion yuan in June, according to the Shanghai head office of
the People's Bank of China, the country's central bank.
That was a contrast to a decrease of 25.89 billion yuan recorded in May,
when stock prices continued to soar, as did the number of new accounts
opened.
Analysts said the rise in bank savings was largely due to the fading
appeal of the stock market, which entered a stage of correction in June
after the central government began various measures to cool the market.
New accounts opened by Chinese investors in the A-share market have
plunged from about 300,000 a day a month ago to a current daily count of
fewer than 100,000.
According to the central bank report, bank savings continued to be
withdrawn and invested in other sectors beginning in the second half of
last year, but the trend was reversed in June.
More than 70 billion yuan in bank savings in Shanghai was diverted to the
capital market in the first four months of this year, according to
previous central bank reports. A 25.89 billion yuan decrease in bank
deposits in May was the biggest monthly drop since January 1999.
In addition to household savings, corporate deposits in Chinese financial
institutions in Shanghai also grew 66.12 billion yuan in June.
The report from the central bank's Shanghai office said there have been
drastic changes in current corporate deposits in the first half of the
year, reflecting fluctuations in the stock market.
While the drain on savings has slowed, the reviving property market in
the city might become a new concern for local banks.
Housing prices in Shanghai have started to rise again over the last few
months.
Home loans issued by the city's domestic financial institutions chalked
up a 4.55 billion yuan increase in June, some 3.69 billion yuan over May
and two-thirds of the total increase for the first half of the year.
Housing loans in Shanghai started to decline in July 2005 after the
central government announced measures to cool the property market.
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