Chinese citizens' investment
in funds has jumped to a record high, according to a survey by the central bank
Funds account for 16.7 percent, unprecedented high, of Chinese residents'
holdings of financial assets in the first quarter of the year, up from 10
percent in the previous quarter, the result of the survey showed.
Deposit remained to be the major financial assets, but its proportion has
dropped to an all-time low of 59.4 percent. The decrease was attributed to low
interest rate and magnet effect of the stock market.
Some 58.4 percent of the polled citizens believed that the interest rate is
low, an increase of 3.2 percent from the previous quarter. The country's
benchmark one-year deposit rate stands at 2.79 percent after a 0.27 percentage
point rise two weeks ago.
But the real interest rate is actually negative, given the accelerating
inflation and interest tax. Consumer Price Index, a key indicator of inflation,
surged 2.7 percent in February. Chinese residents' interest income is subject to
a 20 percent tax.
A bullish stock market also contributed to the reduction in the proportion of
deposits. The benchmark Shanghai Composite Index has grown nearly 20 percent
after rallying 130 percent last year.
The share of stocks in the residents' financial assets holdings rose two
percent, said the result of the survey posted on the central bank's website,
without giving a specific percentage of the stocks in the holdings.
Meanwhile, 30.3 percent of the surveyed residents thought the purchase of
stocks or funds are worthwhile under the current interest rate and commodities
price level, an increase of 11.7 percent from the previous quarter.
The number of funds in the country has topped 300 by the end of 2006, with a
market value of nearly 1 trillion yuan, official statistics showed.
Last year witnessed the awesome addition of 7.8 million funds investors.
Before that, China has only 6.5 million funds investors after more than seven
years of development.
In 2006, equity funds made up nearly 50 percent of the funds market,
replacing balanced funds as the mainstream product, earlier reports said.