Title: Large-Denomination Certificates of Deposit in High Demand Despite Short Supply
Subtitle: Why are depositors scrambling to secure these investment products?
By Wang Guojun
Recently, the scarcity of large-denomination certificates of deposit has become a hot topic of discussion among depositors. Many individuals claim that these certificates have become increasingly difficult to obtain, especially the three-year ones, which offer a relatively high fixed income.
Depositors have compared the situation to grabbing the attention of a live broadcast room, with the certificates being sold out within seconds. Despite reservations and persistent efforts, many have been unsuccessful in purchasing these lucrative deposit products.
Large-denomination certificates of deposit refer to high-value deposit certificates that generally provide higher interest rates compared to regular time deposits of the same term. However, it is worth noting that these certificates require an initial deposit of at least 200,000 yuan, making them inaccessible to many.
The popularity of these certificates stems from their ability to offer relatively high returns. On social media platforms, there is an abundance of posts and videos providing tips on finding channels to purchase large-denomination certificates of deposit and strategies for acquiring them. Even as interest rates on these certificates decline, 32.1% of respondents in a survey still express a preference for deposit products represented by large-denomination certificates of deposit.
The struggle to purchase these certificates is especially evident in large state-owned banks. As interest rates drop, the availability of large-denomination certificates of deposit diminishes. At a branch of a joint-stock commercial bank, the staff confirmed that there had been an influx of depositors inquiring about large-value certificates of deposit. Meanwhile, in another large state-owned bank, only one- and two-year terms were available, with no three-year options. The interest rates offered by the large state-owned banks have fallen below 3%, making them relatively less attractive to potential buyers.
The appeal of large-denomination certificates of deposit extends beyond individuals, with some listed companies also joining the pursuit. A total of 178 listed companies have issued entrusted wealth management announcements involving these certificates in the current year.
Jiang Zhaoyi, the deputy director of the Jiangsu Provincial Financial Research Institute, offers two main reasons for the popularity of these certificates. Firstly, the high relative interest rates make them an attractive investment choice for depositors. Secondly, the involvement of listed companies using idle funds for large-denomination certificates of deposit affects the decision-making of individual depositors by diverting financial management motivation away from other investment avenues, such as stocks, which carry higher risks.
Experts in the banking industry emphasize the importance of issuers following the necessary regulations for the issuance of large-denomination certificates of deposit. Adjustments to the annual issuance plan must also be filed accordingly. As the popularity of these certificates increases, experts suggest diversifying investment strategies and considering other options besides deposits to balance income and risk.
In conclusion, despite their scarcity, large-denomination certificates of deposit continue to attract depositors who seek stable and reliable investment channels. With ongoing reductions in deposit interest rates, the advantages of these certificates will diminish. Therefore, it is advisable for individuals to adopt a balanced investment approach, spreading investments across multiple avenues to manage expectations and reduce risks.
(This article originally appeared in the Nanjing Daily/Purple Mountain News and was written by Wang Guojun.)