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Deposits 'diverted to stocks'

By Xin Zhiming and Wang Zhenghua | China Daily | Updated: 2007-05-14 06:58

Reduced bank deposits by Chinese households suggest that a large amount of money is being invested in the capital market, according to the central bank.

Household deposits decreased by 167.4 billion yuan ($21.7 billion) in April. In contrast, they increased by 60.6 billion yuan ($7.9 billion) at the same time last year, the People's Bank of China said on its website yesterday.

The high growth rate of M1-a narrow measure of money supply that includes cash and demand deposits - plus diminishing household deposits suggests Chinese households are keeping money on tap for investment in the capital market. The red-hot stock market has grown by more than 50 percent this year after doubling last year.

Deposits 'diverted to stocks'

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