2001-06-26 09:44:44
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2001-06-26 09:44:44
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Booming B shares lure money out of banks
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| Author: SHEN GANG | ||
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Attracted by a booming B-share market, and worried about declining interest rates, Chinese residents are increasingly choosing to invest rather than save their foreign currency, according to the latest survey report issued by the China Economy Monitoring Centre. About 31.9 per cent of questioned families will reduce their foreign currency deposits in order to invest in B-share markets, where investors can trade stocks using US dollars on the Shanghai stock exchanges or using Hong Kong dollars on the Shenzhen stock exchanges, according to the survey. The survey was conducted early this month and sampled 900 families in three major cities - Beijing, Shanghai and Guangzhou. The report found that nearly 50 per cent of surveyed families said that they held foreign currency deposits, especially deposits in US dollars. Beijing (60.8 per cent) has the most foreign currency deposit holders with Guangzhou close behind (56 per cent) and Shanghai (30 per cent) bringing up the rear. Most of the surveyed families received their foreign currency from the currency exchange market, while others got US dollars in their salaries and a number received their foreign currency from overseas relatives, according to the survey. Since China opened its B-share market to domestic investors in February this year, trading stocks in the market has become the most popular way for Chinese people to make money from their foreign currency savings. Before that saving foreign currency in banks was the most common way to hold currency, according to the centre. About 34.6 per cent of the surveyed families said that they would reduce their foreign deposits in the second quarter of this year. Only 14.1 per cent of those questioned intend to increase their deposits, according to the survey. Besides investing deposits in the B-share market, the decreasing interest rate and the opening of the foreign currencies exchange market to domestic residents are the other main reasons families are reducing their savings, according to the survey. The survey also found that people are becoming more sensitive to interest rate changes. Over 53 per cent of surveyed people complained that the central bank did not inform residents of reductions in the interest rate in time, according to the survey. "China has cut interest rates against the US dollar three times following rate cuts by the US Federal Reserve. The interest cap between the two countries is shrinking now, so it is only natural that more Chinese residents are becoming more sensitive to the changes. People were not so sensitive to these changes in the past," said Zhang Shuguang, director of the Beijing Tianze Economic Institution.
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