Center
Expert: Don't empty wallets to ride the bull market
By Qi Jingmei (China Daily )
Updated: 2007-05-24 10:05
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The author Qi Jingmei is an economist with the State Information Center
Two developments in the economy are worth our attention: The increase in bank savings keeps slowing. A large amount of capital keeps pouring into the stock market.
Bank savings have been sharply rising over the last decades. But a brake seems to have been put on the increase late last year. Moreover, the long-term increase in bank savings continued to drop in the first fourth months of this year.
renminbirose by 444 billion yuan ($55.5 billion), 13.3 billion yuan ($1.74 billion) less than the same period last year.
It is the excessively prosperous stock market that has siphoned off individuals' bank deposits.
According to the estimates of the Shanghai branch of the People'sBank of China(the central bank), more than 70 billion yuan ($8.76 billion) of deposits drained from Shanghai's commercial banks to the capital market in the first four months of this year.
At the same time, fixed saving deposits in the financial institutions in the city decreased by 9.06 billion yuan ($1.13 billion) under the influence of the increasingly booming stock market and the issuing of still more new shares in April.
Of the capital flowing into the stock market, an overwhelmingly large proportion belongs to individuals.
For instance, 160 billion yuan ($20 billion), out of the total 250 billion yuan ($31.25 billion) that flooded into the stock market in April came from individual investors. The rest of the 83 billion yuan was from institutional investors.
In a matter of just a few months, individual investment has become the mainstay of capital newly pouring into the yuan-denominated A-share market.
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