The chain reaction triggered by the reduction of the listed deposit interest rate is rapidly emerging, among which the phenomenon of "out of stock" of large-amount certificates of deposit is particularly prominent, which is not only a microcosm of short-term deposit outflow, but also indicates a profound change in the direction of deposit flow.
The phenomenon of "out of stock" of large-value certificates of deposit
Many commercial banks are close to "out of stock" of large-denomination certificates of deposit, which reflects the contradiction between depositors' strong demand for high-yield deposit products and insufficient supply after the deposit interest rate was lowered. Large certificates of deposit have always been favored by investors due to their relatively high interest rates and flexibility. However, with the general reduction of deposit interest rates, although the attractiveness of large-denomination certificates of deposit remains, the supply is difficult to meet the market demand, resulting in frequent "out-of-stock" phenomena.
The reduction in deposit rates means that the interest income of depositors will be reduced, which weakens the attractiveness of savings to a certain extent. On the contrary, the relative high yield and flexibility of wealth management products have made more depositors begin to consider turning their funds to the wealth management market. In particular, with the continuous development and improvement of the bank wealth management market, the types and quantities of wealth management products continue to increase, providing investors with more diversified choices. Therefore, the reduction in deposit rates may promote a larger scale of deposits to "move" to wealth management.
In addition to promoting the flow of funds to the wealth management market, the decline in deposit income may also have a certain positive effect on promoting consumption. Lower deposit rates have made savings less attractive, prompting some depositors to spend their money. In addition, as lending rates fall, the cost of financing for businesses and individuals will also decrease, which will further stimulate investment and consumer demand. Therefore, the reduction of deposit interest rates may have a certain positive effect on promoting consumption in the short term.
Follow-up adjustments of commercial banks
After the major state-owned banks took the lead in adjusting deposit interest rates, other commercial banks also followed suit. This shows the effectiveness of the market-oriented adjustment mechanism for interest rates. When adjusting deposit interest rates, commercial banks will take into account factors such as their own assets and liabilities, profitability and market competition. It is expected that in the coming period, with the changes in the economy and price trends, there is still room for the policy rate to be lowered, which will drive the follow-up adjustment of LPR quotations. At that time, commercial banks may further adjust the level of deposit interest rates according to market conditions and policy guidance.
The large-denomination certificates of deposit products on the mobile banking of many major state-owned banks have indeed been sold out across the board, and this trend has spread from medium- and long-term products with higher annual interest rates to short-term large-denomination certificates of deposit with lower interest rates. This shows that in the current economic environment, investors' demand for stable income and asset allocation is still strong, especially in the context of the general reduction of deposit interest rates, large certificates of deposit as a relatively safe and stable income investment tool, favored by investors.
With the reduction of deposit rates, the attractiveness of traditional savings products has weakened, while large certificates of deposit have become the preferred choice of investors due to their relatively high interest rates. However, due to the strict control of the quota of large-denomination certificates of deposit by banks, the supply exceeds the demand. Under the current economic situation, investors have increased awareness of risk control and are more inclined to choose investment products with lower risks and stable returns. Large certificates of deposit meet this demand, so the market demand is strong. While adjusting the deposit interest rate, banks are also optimizing their own liability structure. As an important tool for banks' active liabilities, the quota allocation and issuance time of large-denomination certificates of deposit may be affected by the adjustment of banks' strategies.
The sell-out of large certificates of deposit (CDs) has made investors face more restrictions when choosing investment products. They may need to turn to other investment channels, such as wealth management products, funds, etc., but these products usually come with higher risks. The shortage of supply in the large CD market may encourage other financial institutions to launch similar products to attract investors, thereby increasing market competition.
The adjustment of deposit interest rates and changes in the large certificate of deposit market reflect the impact of policy guidance on the financial market
In the future, policy adjustments may continue to affect investors' investment behavior and the pattern of financial markets. The large-denomination certificates of deposit market of the Industrial and Commercial Bank of China (ICBC) and the Bank of Communications are both in a state of varying degrees of tension, especially the medium- and long-term large-denomination certificates of deposit are generally sold out, while the quota of short-term large-denomination certificates of deposit is also relatively limited.
According to the ICBC App, except for the 2-year large-denomination certificates of deposit with an annual interest rate of 1.70%, the large-denomination certificates of deposit of other maturities are all in a state of "sold out". This indicates that investors have strong demand for large certificates of deposit, especially for medium and long-term products. A staff member of a Guangzhou branch of ICBC said that there is no quota offline and needs to make an appointment to apply. This is further evidence of the current tight state of the large CD market and the cautious attitude of banks in controlling quotas.
According to the Bank of Communications App, the large-denomination certificates of deposit on sale are mainly short-term products with maturities of 3 months, 6 months and 1 year, with annual interest rates of 1.6%, 1.8% and 1.9% respectively. This may be related to the bank's current liability structure and market strategy to attract investors and control costs by issuing short-term products. Similar to ICBC, Bank of Communications' medium- and long-term certificates of deposit are also relatively scarce, which may be due to strong market demand and limited supply.
The tight market for large certificates of deposit (CDs) has created additional restrictions on investors' choice of investment products
They may need to adjust their investment plans to consider alternative investment channels or accept lower yields. As demand outstrips supply in the CD market, other financial institutions are likely to step up their promotion efforts and launch more attractive products to attract investors. This will further intensify market competition and promote the diversification of the financial market.
With a number of large state-owned banks and joint-stock banks successively lowering their deposit interest rates, China's financial market has officially entered a new round of deposit reduction. This round of adjustment not only covers a wider range of banking institutions, but also includes the demand deposit interest rate into the scope of adjustment for the first time, showing the deepening and refinement of financial market regulation at the policy level. The reduction in the listed interest rate of deposits has reduced the attractiveness of savings deposits, especially the excess yield of deposits has been further reduced compared to wealth management products. This "price comparison effect" will drive more deposit funds from banks to the wealth management market in pursuit of higher returns.
With the transfer of deposit funds, the wealth management market will receive more incremental capital support
This will help the wealth management market continue to repair and expand rapidly, and provide investors with more diversified investment options. The reduction in the interest rate on deposits will prompt banks to adjust their liability structure and rely more on active debt instruments such as large-denomination certificates of deposit and interbank certificates of deposit to maintain reasonable capital costs and debt stability.
As an important part of the benchmark interest rate of the financial market, the reduction of the deposit interest rate will affect the interest rate system of the entire financial market. This will prompt financial institutions to re-evaluate their asset pricing and risk management strategies to adapt to the new market environment.
Considering the current economic situation and monetary policy guidance, there is still room for further reductions in deposit rates in the future. This will help reduce the cost of financing for the real economy and promote economic growth. With the transfer of deposit funds to the wealth management market, the competition in the wealth management market will become more intense. Financial institutions need to continuously innovate products and services and improve their investment management capabilities to attract and retain investors.
In order to regulate the development of the wealth management market, the regulatory authorities will continue to improve relevant policies and regulations, and strengthen the supervision of wealth management products. This will help protect the legitimate rights and interests of investors and promote the healthy and stable development of the wealth management market. The reduction of the listed deposit interest rate is one of the important measures for the regulation of the financial market, and its impact is far-reaching and extensive. In the future, with the continuous development and improvement of the financial market, we will see more diversified investment channels and more abundant financial products for investors to choose from.