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Chinese pour savings deposits into stock market
Latest Updated by 2007-05-14 09:21:34
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More than 70 billion yuan (9.1 billion U.S. dollars) was transferred from savings accounts in Shanghai to stock trading accounts in the first four months of this year, the Shanghai branch of the People's Bank of China estimated on Saturday.

In April alone, RMB-denominated savings deposits with Chinese banking institutions decreased by 8.5 billion yuan (1.1 billion U.S. dollars).

"Given the continuous bullish stock market, the diversion of savings deposits will persist for a good while yet," said an official with the Shanghai branch of the Industrial and Commercial Bank of China.

Shanghai is far from being an exception. The craze has challenged banking service facilities in some areas.

In Changsha, capital city of central China's Hunan Province, a lady surnamed Wei found tens of thousands of yuan of her money deposited at a local outlet of the China Construction Bank failed to be transferred when she was in a hurry to buy in stocks at around 9:00 a.m. on April 30, the last trading day before the week-long May holiday. Her money was safe but the bank's computer crashed due to an overload of transfer requests.

A similar cases occurred again with the China Construction Bank Changsha branch on May 8, the first trading day after the holiday. Company sources said the bank is testing new computer servers with a larger operating capacity.

The heavy inflow of funds, strong corporate profits, and double-digit economic growth have helped drive up the key Shanghai index by more than 51 percent this year after it soared 130 percent last year.

In the first trading week after the May Day holiday, the combined market value of the two bourses on the Chinese mainland swelled by 4.97 percent from April 30 to 16.89 trillion yuan (2.2 trillion U.S. dollars).

Investors dived into the robust capital market. It is reported that on May 8, the first trading day after the weeklong holiday, the two bourses recorded the opening of 421,831 new stock trading accounts, including 368,400 accounts for the A-share market. This brought the total number of stock trading accounts on the two exchanges to 94.37 million.

According to a monthly report jointly produced by Shanghai Securities Journal and Shenyin Wanguo Securities, in April alone a record 250 billion yuan (32.5 billion U.S. dollars) was added to the capital ready for stock trading, bringing the total on the A-share market to 980 billion yuan (127.3 billion U.S dollars).

The investment spree has aroused concern from the industry watchdog.

In a notice released on Friday, China Securities Regulatory Commission (CSRC) urged stock exchanges, securities dealers and related authorities to educate investors about the risks of stock market investment.

These institutions must make investors understand that stock markets are risky and they should be cautious in entering the market, especially those who use all their savings or pawn their apartments for loans to invest in stocks, the notice said.

Editor: Yan

By: Source: China View website
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