Analysis: China’s Great Savings Migration Gains Steam
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A review of historical trends indicates that the probability of a new migration of household deposits is high. China has witnessed seven such migrations in its history, with notable flows into the stock market occurring in 2009 and 2014–2015. Several conditions that triggered past migrations are now in place.
These triggers include cuts to deposit interest rates, which began in 2022; an expansion of liquidity, with the monetary policy stance shifting from “prudent” to “moderately loose”; the initial emergence of profitable assets, evidenced by the Shanghai Composite Index’s 25% rise since the Sept. 24 new policy; and policy catalysts, such as the ban on “manual interest rate subsidies” and a new rule allowing 30% of new insurance premiums to be invested in A-shares.
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- China has seen seven historical migrations of household deposits, notably into stocks in 2009 and 2014–2015, driven by falling deposit interest rates and liquidity expansion.
- In 2024, household deposit migration began conservatively but shifted toward equities as the Shanghai Composite Index rose 25% since September policy changes, with client margin accounts and insurance stock investments increasing.
- Historically, deposit migration lags market rallies and tends to accelerate in the middle or late bull market stages, amplifying gains but following—not causing—stock market upswings.
- Zheshang Securities
- Zheshang Securities is a financial institution that employs Li Chao as its chief economist. The article does not provide further details about the company beyond this association.
- 1998：
- Market-oriented reforms in real estate, healthcare, and education spurred a shift from savings to consumption.
- November 2008：
- Market bottomed, starting the rally that led to large household deposit migration in 2009.
- 2008–2009：
- Deposit rates were cut by 189 basis points; stimulus package of 4 trillion yuan ($580 billion) was implemented.
- May 2009：
- Seven months after the market bottomed, household deposit year-over-year growth turned negative, indicating deposit migration to the stock market.
- July 2009：
- Household deposit migration sped up, in the middle/later stage of the bull market.
- August 2009：
- The stock market peaked, one month after the acceleration in deposit migration.
- 2009：
- Significant migration of household deposits into the stock market; Shanghai Composite Index rose 103.4% through the rally.
- 2010–2012：
- Deposit rates were cut by 75 basis points.
- 2012–2013：
- Expansion of 'shadow banking' sector and diversified investment channels for household deposits.
- 2014：
- Four months after the market began rising, household deposit migration lag was observed.
- 2014–2015：
- Notable migration of household deposits into the stock market; Shanghai Composite Index rose 159.5%; deposit rates were cut by 150 basis points.
- December 2014：
- Acceleration of household deposit migration to equities began.
- June 2015：
- Market topping out, four months after accelerated household deposit movement began.
- 2015–2016：
- Shantytown redevelopment programs supported property market as an outlet for household deposit migration.
- 2022：
- Deposit interest rate cuts began.
- 2022–2025：
- Deposit rates cut by 70 basis points.
- 2024：
- In a low-interest-rate environment, migration of deposits began conservatively, with flows toward net-value bank wealth management products, money market funds, and insurance products.
- After September 2024：
- Trend of deposits moving directly or indirectly into equity assets emerged.
- By the end of 2024：
- Client margin accounts at securities firms recorded significant growth, and insurance companies’ investment in stocks increased year-over-year.
- First quarter of 2025：
- Insurance companies’ investment in stocks showed a high year-over-year increase.
- 2025：
- Wealth-generating effects of the rising stock market are expected to further attract individual investors.
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