Source: CITIC study

From the perspective of the change in the scale of savings deposits and the poor growth rate of residents' income and expenditure, there is an obvious phenomenon of "excess savings" in 2022, which is mainly formed by the poor expectation of residents, the lack of consumption scene, the decline of real estate sales and the return of financial products. The improvement of fundamentals in 2023 is expected to lead to the consumption of precautionary savings, but the recovery of consumption and real estate needs other safeguards, so it is not appropriate to overestimate the boosting effect of excess savings on household consumption and real estate sales.

▍The phenomenon of "excess savings" is obvious in 2022.

In 2022, RMB deposits increased significantly compared with the same period last year, of which household deposits contributed most of the increase, an increase of 7.94 trillion yuan over the same period last year. The scale of "excess savings" under different definitions is not consistent, but whether the balance of financial management is included in the statistics, or the year-on-year growth difference between household income and expenditure is calculated, it reflects the obvious "excess savings" in 2022.

▍Analysis of the sources of excess savings:

The uncertainty of ① asset value and income level increases, and residents tend to save more.

② is affected by the risk of the real estate industry, the willingness of residents to buy houses has decreased, and the potential allocation of housing has been transferred to savings; in addition, affected by the epidemic, the lack of consumption scene has also made residents' consumption expenditure significantly lower than the potential scale since 2022.

③ with the optimization of epidemic prevention policy at the end of 2022, the strengthening of real estate support and the improvement of economic expectations, bond market yields rose sharply, and the net financial value was generally damaged, causing investors to redeem their financial management to deposits.

▍How "excess savings" will be transformed.

First, the boost of excess savings to consumption should not be overestimated: the infection rate will rise after the relaxation of ① control, and there is likely to be repetition, which will have a certain impact on residents' travel consumption. ② from overseas experience, after the deregulation of consumption and GDP growth rebounded more significantly in the quarter, but then tend to level off. The trend of weakening consumer confidence due to the decline in ③ expectations will take some time to reverse.

Second, the release of real estate still needs to observe the expected repair: the key to whether excess savings can be successfully released to the real estate industry and stimulate real estate sales lies in the improvement of residents' confidence in the delivery problem and the expected judgment on the wealth effect of real estate. The current policy has some support, but the real estate wealth effect and house price growth are still a long-term constraint. We expect the release of excess savings to the real estate industry is limited.

Third, the capital market is also an important direction of flow: when a large number of residents' excess savings cannot enter the field of consumption and real estate in the short term, considering that the current financial assets have a certain allocation value after adjustment, we believe that some of the excess savings are likely to flow into the capital market.

▍Summary:

Improvements in fundamentals in 2023 are expected to drive the consumption of precautionary savings. However, although the high increase in deposits provides support for financial reserves, the recovery of consumption and real estate still needs other protection, such as further improving residents' income expectations, guaranteed exchange buildings, stabilizing people's livelihood, and so on. Therefore, at present, it is not appropriate to overestimate the boosting effect of excess savings on household consumption and real estate sales. If the recovery of consumption and real estate data after the Spring Festival is still slow, "poor expectations" and incremental funds in the capital market may bring certain investment opportunities for the bond market.

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