Chinese households ramped up their cash holdings last month in a sign that they’ve begun shying away from local stocks just as the market is challenged by renewed trade tensions, reports Bloomberg. Household savings rose by RMB 2.96 trillion ($415.5 billion) in September, the most since March, according to data released by the People’s Bank of China late Wednesday. The pace of increase was higher than that in the same month last year.
The renewed build-up of savings may deprive the stock market of a key source of support, after low deposit rates and meager government bond yields spurred investors to seek higher returns in equities. Fading support from households bodes ill for Chinese stocks at a time when trade tensions between the US and China are showing no signs of easing.
“The migration of China’s household deposit to riskier assets has decelerated,” which will likely moderate the rally in stocks, Li Chao, chief economist at Zheshang Securities, wrote in a note.