Where exactly have deposits migrated to?

On September 5th, A-shares initiated a strong rebound after three consecutive days of adjustment. By market close, the Shanghai Composite Index rose 1.24%, the Shenzhen Component Index gained 3.89%, and the ChiNext Index surged 6.55%. Over 4,800 stocks across the market posted gains, with the ChiNext Index showing particularly strong momentum. In terms of sectors and themes, new energy tracks collectively erupted with significant strength.

The Shanghai Composite Index reclaimed the 3,800-point level. Is the slow bull market continuing? Recently, a set of data released by the central bank has drawn attention to quietly changing trends in household deposits. Financial data for July showed that household sector deposits decreased by 1.1 trillion yuan that month, while non-bank institutional deposits increased by 2.14 trillion yuan.

When non-bank deposits and household deposits show "one rising, one falling," discussions about deposit "migration" resurface. In recent years, China's household savings have grown rapidly. From 2022-2024, households accumulated 48.7 trillion yuan in new deposits, with savings deposit balances growing 47.6% cumulatively, exceeding nominal GDP growth rates.

Against the backdrop of people increasingly favoring savings, the 1.1 trillion yuan decrease in household deposits appears unusual. This raises the question: where exactly have these deposits migrated to?

On August 25th, the Shanghai Composite Index rose 1.51% to close at 3883.56 points. In late August 2025, the Shanghai Composite Index broke through 3,800 points, reaching a 10-year high.

How Much "Ammunition" Can This Provide for the Stock Market?

Deposit migration refers to the process of households transferring bank deposits to other asset categories, including stocks, real estate, bank wealth management products, trusts, money market funds, insurance, and overseas assets. This represents a reallocation of household assets, reflecting the logic of funds moving from low-risk, low-yield deposits to higher-yield, higher-risk assets.

China Galaxy Securities research believes that "household deposit growth declining for three consecutive months or more" is one of the key conditions for identifying deposit migration. A new round of deposit migration appears to be underway.

Why have people suddenly become less inclined to save? Continuously declining deposit rates are a major factor. Since 2022, domestic deposit rates have undergone multiple rounds of cuts, with current deposit rates falling to 0.2%-0.3% and some term deposit rates dropping below 2%. In this low interest rate environment, households naturally experience increased anxiety about deposit returns and are motivated to seek higher yields.

Guosen Securities research, by reviewing deposit migration data from rounds in 2006-2007, 2009, 2012-2015, and 2021, found that while low interest rates are important drivers of deposit migration, capital market performance is the core driving force.

The A-share market has gradually stabilized and recovered recently. By the end of August 2025, the Shanghai Composite Index had risen by a quarter from its 2024 lows. With deposit rates continuously declining on one side and stock market profit effects beginning to emerge on the other, this "one falling, one rising" pattern easily leads people to establish connections between the two.

China Galaxy's macro team states directly: "Not every deposit migration brings a bull market, but bull markets generally accompany deposit migration. In other words, deposit migration is not necessarily a sufficient condition for bull markets, but it is one of the main conditions for confirming bull market establishment."

The market is already calculating how much "ammunition" this round of deposit migration can provide for stocks.

CITIC Securities believes that on one hand, since 2018, domestic household sectors have accumulated excess savings exceeding 30 trillion yuan, with 5 trillion yuan in excess savings formed after 2022 being more likely to convert to consumption or investment funds in the short term due to their recent formation and households' more flexible allocation intentions. On the other hand, from a deposit maturity perspective, over 90 trillion yuan in deposits are expected to mature in 2025. Assuming 5%-10% of these funds seek higher returns, the outflow could reach 4.5-9 trillion yuan. Comprehensively, this round of deposit migration may see funds flowing out of deposits exceeding 5 trillion yuan.

"Since 2020, due to the COVID-19 pandemic, property market decline and other factors, households have accumulated considerable excess savings. During the thirty years from 1990-2019, new deposits as a proportion of nominal GDP remained basically stable at 9%-10%, while from 2020-2024, this proportion increased by over 2 percentage points on average. Based on this calculation, we believe household excess savings amount to 13-23 trillion yuan. If this portion of funds can steadily flow into the stock market, it will provide major liquidity support for capital markets, with volumes potentially exceeding historical deposit migration scales of hundreds of billions to 2-3 trillion yuan." China Galaxy Securities' macro team notes that during past deposit migrations, real estate often provided some diversion effect, but with property markets still in a bottoming-out phase, the probability of deposits flooding into real estate in the short term is low.

China Galaxy Securities' macro team also believes three major conditions triggering household deposit migration into stocks are preliminarily met: First, low interest rates are established. Since 2023, the central bank has continuously cut interest rates and reserve requirements, with deposit rates falling to historic lows in 2024-2025, and wealth management and money fund yields declining synchronously, significantly reducing deposits' marginal attractiveness. Second, policy makers continuously strengthen the stock market's position. The new "Nine Provisions" were issued in 2024, emphasizing improved capital market positioning, refined delisting systems, and encouraging long-term capital market entry. July's Political Bureau meeting proposed "enhancing domestic capital markets' attractiveness and inclusiveness," highlighting capital markets' upgraded positioning in national strategic priorities. Third, stock market profit effects are beginning to emerge. Since July 2025, A-share indices have rebounded significantly, market enthusiasm has rapidly increased, institutional and retail funds have flowed in simultaneously, and household risk appetite has somewhat recovered.

How Do Wealth Management Products Capture This "Traffic"?

However, in reality, where these migrated deposits go is not as simple as directly flowing into stocks. While household deposits decreased by 1.1 trillion yuan in July, non-bank institutional deposits increased by 2.14 trillion yuan.

CITIC Securities' research team estimates that by the end of July 2025, bank wealth management scale grew by an unexpected 2 trillion yuan month-over-month to 32.67 trillion yuan. This was mainly due to deposit reallocation triggered by concentrated maturation of three-year high-rate deposits, and deposit rate declines outpacing wealth management yield declines, enhancing wealth management products' relative attractiveness. August wealth management scale is expected to exceed 33 trillion yuan, with full-year projections reaching 33.5 trillion yuan.

Currently, bank wealth management products are the main recipients of migrated deposits.

An industry insider explained that some "low-volatility wealth management" products with "relatively low risk levels and small net asset value fluctuations" have gained favor as deposit alternatives. Additionally, as A-share markets stabilize and recover, some previously "non-mainstream" equity-linked wealth management products are becoming popular.

"Previously, we generally recommended low-to-medium risk fixed-income wealth management products to clients because wealth management customers have relatively low risk preferences," a bank wealth management subsidiary representative explained. Fixed-income wealth management products mainly invest in bond markets, but these products haven't performed well recently, mainly due to bond market volatility under "stock-bond seesaw" factors, affecting bond-investing wealth management product returns.

"In contrast, with recent strong stock market performance, some equity-linked wealth management products have outperformed fixed-income products, but these carry higher risks, belonging to R3 grade, and were rarely recommended to clients previously," the representative noted. Equity-linked wealth management products allocate portions of funds to stock markets.

"To control risks, equity-linked wealth management products don't allocate much to stocks. Even when publicly announced ratios don't exceed 20%, actual investment is controlled within 10%, or even initially only 3% allocated to stocks, then adjusted based on market performance. Public wealth management products still worry about missing opportunities, with more funds still invested in bond markets," the representative explained.

A city commercial bank wealth management subsidiary salesperson showed a equity-linked wealth management product with a minimum 91-day holding period, achieving 3.92% returns over the past six months. "This product was only launched in late October last year, coinciding with the market rally that began at the end of September. Previously, few people purchased this product, with investors generally preferring low-to-medium risk fixed-income products and even intentionally avoiding equity-linked products. But in recent months, there's been a clear trend of inquiries and purchases of equity-linked wealth management products, with more equity-linked products appearing among bank-distributed wealth management offerings."

"While we don't over-recommend equity-linked wealth management products to clients, increasingly more customers actively choose to purchase these products," the salesperson noted. Some wealth management clients even skip equity-linked products to directly focus on debt-biased hybrid funds, which have similar investment targets to equity-linked wealth management products but higher stock market allocation ratios up to 20%, representing the direction being promoted recently.

"Recently, even elderly clients who previously only focused on wealth management products have begun purchasing these grade-three and grade-four risk fund products, and have indeed made money," the interviewee observed. The emerging profit effects in stock markets are driving more people to participate through various channels.