{"id":33716,"date":"2025-09-21T01:30:09","date_gmt":"2025-09-21T01:30:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/33716\/"},"modified":"2025-09-21T01:30:09","modified_gmt":"2025-09-21T01:30:09","slug":"chinese-savers-have-us23-tril-and-few-options-beyond-stocks","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/33716\/","title":{"rendered":"Chinese savers have US$23 tril and few options beyond stocks"},"content":{"rendered":"

(Sept 21): Chinese households are tiptoeing back into equities, driven in part by a stark reality: Almost nothing else looks worth buying.<\/p>\n

The CSI 300 Index has surged more than 25% since its April lows, fuelled by enthusiasm over artificial intelligence and Donald Trump\u2019s softer rhetoric on China. But other asset classes \u2014 from wealth management products to money-market funds \u2014 remain stuck in a years-long slump.<\/p>\n

That\u2019s reviving an old bull market mantra: there is no alternative to stocks. The idea that China\u2019s small investors will shift a chunk of their US$23 trillion (RM88.3 trillion) savings pile to the stock market is a tantalising one for global firms, who are showing signs of returning after years on the sidelines.<\/p>\n

\u201cThe pressure to save is fading,\u201d said William Bratton, head of cash equity research in Asia-Pacific at BNP Paribas Exane. The huge savings pool is one reason his firm is \u201cstructurally positive\u201d on China\u2019s stock market, he said.<\/p>\n

So far, retail investors haven\u2019t driven the rally \u2014 local institutions and foreign inflows have, according to Goldman Sachs Group Inc. But small investors are central to the bull case. JPMorgan Chase & Co sees about US$350 billion of additional savings flowing into stocks by the end of 2026.<\/p>\n

Here are some of the other places Chinese investors could put their money \u2014 and why they probably won\u2019t want to.<\/p>\n

Cash<\/p>\n

Cash is still king for China\u2019s nation of savers, but the crown has lost its shine.<\/p>\n

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The nation\u2019s four biggest banks offer returns of around 1.3% for five-year savings accounts, down from around 2.75% in 2020, according to state media reports. Demand deposits, which savers can withdraw at any time, pay just 0.05% per year.<\/p>\n

Returns on money-market funds have also crumbled. The giant Tianhong Yu\u2019E Bao fund, which manages around US$110 billion of assets, returns around 1.1%. That is less than half what the fund\u2019s investors earned at the start of 2024.<\/p>\n

Bonds<\/p>\n

Bonds aren\u2019t doing much better. Investors holding Chinese government debt have faced more monthly losses than gains this year so far, according to a Bloomberg gauge of total returns.<\/p>\n

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Falling bond prices are accompanied by higher yields, which should ultimately make bonds more attractive to investors. But a resumption of tax collection on interest paid by the government or financial institutions has given investors yet another reason to put their money elsewhere.<\/p>\n

The yields available also remain unappealing in historical terms, even after the recent rise. Benchmark 10-year government bond yields now hover around 1.80%, well below the five-year average of 2.58%.<\/p>\n

Property<\/p>\n

Property was for years the default option for Chinese investors looking to generate investment returns, but after a four-year downturn there are few signs of buyers returning.<\/p>\n

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Many families already own more than one home, reducing potential demand. President Xi Jinping\u2019s repeated mantra that \u201chouses are for living, not for speculation\u201d has served as a warning to would-be investors. Property developers, struggling to finish previously sold homes, have also dented confidence.<\/p>\n

Roughly 58% of the country\u2019s household wealth is in real estate, down from 74% in 2021, according to research from China International Corporation Corp. Stocks and other high-risk financial assets account for 15% after jumping six percentage points over the same period, the firm estimates.<\/p>\n

Wealth management<\/p>\n

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Wealth management products have long been a popular investment for investors. But average annualised returns for both pure fixed-income and mixed strategy wealth management products are now under 3%, according to data tracker PYStandard, which analysed returns from recent quarters. That cements a more than two-year downturn in what investors can earn from WMPs.<\/p>\n

Insurance<\/p>\n

Life insurance products, a popular form of investment in China, have gone in the same direction: The annualised rate of return on some of Ping An Insurance Co\u2019s universal policies has slumped to 2.5% from 4.3% before the Covid-19 pandemic, according to its own data.<\/p>\n

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Still, if there is no alternative to equities \u2014 what about stock markets elsewhere?<\/p>\n

Chinese investors have in past years made bets on other markets, including finding ways to get exposure to the Magnificent Seven technology stocks in the US. But capital controls are a big hurdle. Local investors aren\u2019t permitted to convert more than US$50,000 into foreign currencies each year, and funds that offer access to foreign markets are subject to their own quotas.<\/p>\n

They also face a heavy tax burden, with local officials imposing a 20% levy on income from overseas investments.<\/p>\n

That means Chinese investors face a choice between a plethora of easy options at home that are largely unattractive, and a few eye-catching assets overseas that aren\u2019t so easy to buy. Analysts are guessing they\u2019ll take the middle ground \u2014 and keep ramping up their bets on local stocks.<\/p>\n

Uploaded by Magessan Varatharaja<\/p>\n","protected":false},"excerpt":{"rendered":"(Sept 21): Chinese households are tiptoeing back into equities, driven in part by a stark reality: Almost nothing…\n","protected":false},"author":2,"featured_media":33717,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[72,61,60,123],"class_list":{"0":"post-33716","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-ie","10":"tag-ireland","11":"tag-markets"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/33716","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=33716"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/33716\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/33717"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=33716"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=33716"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=33716"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}