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E-mail China.org.cn, May 14, 2024
China Financial and Economic News:
According to media reports, investors have been actively purchasing savings bond, leading to a situation where some banks are unable to meet demand. How do you view this phenomenon? Thank you.
Wang Dongwei:
My colleage Mr. Li Xianzhong will answer this question.
Li Xianzhong:
Thank you for your question. Savings bonds represent national credibility. They are favored by investors due to their capital preservation and interest protection along with stable returns. The progression of March's and April's issuance of savings bonds was generally stable, but there was, to a certain extent, imbalances between supply and demand. To explain this, it is important to understand that there are different types of savings bonds and different issuance methods. Currently, we have two kinds of savings bonds: certificated bonds and electronic bonds .
Certificated savings bonds are normally available at bank counters. Due to varying customer bases and demands at each branch, there are challenges with adjusting the sales quotas across different branches, which can lead to supply-demand imbalances at some locations. Take the issuance of certificated bonds in March, the Beijing branch of a major commercial bank sold 70% of its total allocation on the first day. Each issuance of treasury bonds would normally last for 10 days. 14 out of 466 outlets in Beijing sold the planned volume within half an hour, causing some investors at the counters to miss out on purchasing bonds.
Electronic savings bonds can be purchased at both bank counters and online via smartphones. And the sales quota can be flexibly adjusted among different channels, either between different banks, different outlets or through online methods. According to statistics, investors over 60 years old, who normally prefer purchasing at bank counters, account for 55% of the total investors of savings bonds. To better meet the needs of this traditional customer segment, the sales quota for electronic savings bonds on the first day are weighted towards counter sales, allocating 60% of the total quota to branch counter sales. This ensures that demand at the counters is generally met.
Since April, the public has paid more attention to savings bonds, which was influenced by factors such as some banks lowering deposit interest rates and suspending sales of large deposit certificates. 99.7% of the planned electronic savings bonds issued in April were sold out on the first day of issuance, which was significantly faster than the average in recent years. At many banks' counters, the bonds were sold over two hours. As the internet or mobile phone platforms could accommodate more investors to buy products simultaneously, these sales were more concentrated, leading to a momentary imbalance between supply and demand of bonds in some banks. Online or on mobile platforms offered by 32 banks, investors had about half an hour on average to purchase savings bonds. The bonds were sold out online or on mobile platforms within a minute at two banks while at seven other banks the record was six minutes.
In order to further meet investors' demand for bond purchases, we will take the following four measures in the next step: First, we will pay close attention to changes in the supply and demand relationship and sales of savings bonds, and study how to appropriately increase the issuance scale. The core of being "hard to purchase bonds for investors" is that demand is strong and supply is relatively insufficient. So, our next step is to appropriately increase the scale of issuance. Second, we will study how to further reduce the limits on individual purchases so that savings bonds can benefit more investors. Third, we will continuously improve the information service of electronic savings bonds on the basis of ensuring over-the-counter sales, and steadily increase the online (mobile phone) sales of electronic savings bonds. At the same time, we will encourage and guide more investors to purchase bonds online or through mobile banking, so as to improve their purchasing experience. Fourth, we will work with relevant departments to further optimize certificate savings bonds' mechanisms for quota allocation to better match branches with actual needs. We will optimize the mid- and long-term arrangements for the issuance ratio of certificate and electronic savings bonds to better meet the needs of investors' demand when purchasing bonds.
That's all for my introduction. Thank you.
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