① Despite the decline in the interest rates of large denomination time deposits, they still offer relatively high returns compared to regular fixed deposits. Additionally, some small and medium-sized banks tend to have higher interest rates. ② For residents, it is advised to base on their own risk tolerance and investment needs to achieve diversified asset allocation.
On November 13, Financial Associated Press reported (Reporter Gao Ping) that in the context of declining interest rates for regular fixed deposits, it was found that low volatility stable wealth management, special deposits, structured deposits, and other products have become recommendations from many wealth management subsidiaries and bank client managers. Meanwhile, since November, several small and medium-sized banks have been actively promoting their large denomination time deposits.
Industry insiders analyzed for Financial Associated Press that after the deposit interest rates were lowered, if deposits constitute a large part of asset allocation, overall returns will decrease. Considering that depositors often have higher safety requirements for funds that are originally meant for deposits, products such as structured deposits, large denomination time deposits, and low volatility stable bank wealth management products have become choices for some clients. For residents, it is advised to base on their own risk tolerance and investment needs to achieve diversified asset allocation.
Interest rates have generally fallen, yet some small and medium-sized banks still offer certain advantages in large denomination time deposit rates.
In the context of widespread decline in bank deposit rates, recently multiple bank client managers have recommended special deposits and structured deposits, while also promoting low volatility stable wealth management. 'In response to the declining trend of deposit rates, investors should adjust their investment mindset, consider their actual situation, and maintain a balance between risk and return for comprehensive asset allocation. For those pursuing stable returns, low volatility wealth management products can be considered,' said a wealth management company, noting that low volatility wealth management primarily invests in assets with matching durations, utilizing the amortized cost method for valuation, strictly controlling drawdowns, and promoting steady growth in net asset value.
A client manager from a joint-stock bank told Financial Associated Press that compared to deposits, wealth management products offer a rich variety of product types and investment durations, providing investors with more diverse investment choices, highlighting their importance in wealth management. On the other hand, wealth management products aim to control risks while seeking stable investment returns, allocating different major asset categories such as money market instruments, bonds, funds, and stocks to enhance product returns.
In addition to low volatility wealth management, several banks have also recently promoted large denomination time deposits. On November 11, Yaan City Commercial Bank announced, 'Personal large denomination time deposits help you grow wealth with an interest rate of up to 2.3% annually.' Information indicated that the bank offers a 2.3% interest rate for 3 and 5-year large denomination time deposits and a 1.95% rate for 2-year deposits; Fukang Rural Commercial Bank also stated recently, 'Unused idle funds should certainly be deposited as large denomination time deposits.' It is understood that this bank is offering limited-time large denomination time deposits from November 12 to December 28, with a 2-year deposit rate of 2.4%. The postal savings bank of china Suqian branch also stated that it will begin selling 1-year, 6-month, and 3-month large denomination time deposits at 9 am on November 11, with limited quotas.
In fact, as a type of deposit product, large denomination time deposits have also seen overall rates follow the trend of declining ordinary deposits in recent years. For instance, one major bank currently offers a 1.9% interest rate for 3-year large denomination time deposits and a 1.45% rate for 1-year deposits, but after the last round of deposit benchmark rate cuts at the end of July, the bank’s rates for 3-year and 1-year large denomination time deposits were 2.15% and 1.7% respectively.
However, compared to other banks, some small and medium-sized banks still have certain advantages with large certificates of deposit. A private bank's mobile app shows that the interest rates for their newly issued large certificates of deposit for 1 year, 2 years, 3 years, and 5 years are 2.1%, 2.5%, 2.55%, and 2.55%, respectively, while their regular deposit rates for 1 year, 2 years, and 3 years are 1.8%, 2.4%, and 2.5%. The bank of guizhou's Liupanshui branch recently stated that their large certificates of deposit allow for flexible withdrawals and can also be transferred, with a three-year interest rate of up to 2.6%.
Despite the decrease in interest rates for large certificates of deposit, they still have certain advantages compared to other stable investment products, said a client manager from a joint-stock bank in peking, noting that large certificates of deposit offer relatively higher returns compared to regular fixed-term deposits. Additionally, some small and medium-sized banks have relatively higher rates.
Regular deposit rates have entered the '1 era.' How to allocate assets?
On October 18, the six major banks announced adjustments to their listed deposit interest rates. This is the second adjustment by state-owned banks this year and also the sixth centralized reduction of listed deposit rates since September 2022. After the adjustment, the listed interest rates for fixed-term deposits from major banks dropped below 2%, entering the '1 era.'
Multiple bank client managers have pointed out that deposit rates have shown an overall decreasing trend in recent years. In this context, how to allocate assets? Analyst Zhou Maohua from china everbright bank believes that investors should pursue a diversified asset portfolio, paying attention not only to returns but also to their own risk preferences and liquidity needs, while taking into account investments for the short term, medium to long term, or retirement.
A bank client manager stated, "Currently, most customer groups focus on short-term stable financial products. In recent years, the rates for financial management and fixed-term deposits have shown a downward trend. Stable financial products mainly invest in low-volatility assets like deposits, which have relatively good stability. Short-term types can be considered, while long-term types can be paired with fixed-term deposits." Another bank financial manager mentioned that when facing the continuous decline in deposit rates, conservative investors could choose to establish a portfolio centered around more stable financial products as a 'ballast,' and additionally allocate some equity products to obtain reasonable and considerable returns while reducing the volatility risks of their asset portfolios.
"When choosing financial products, one must fully consider their own risk tolerance and liquidity needs, using a scientific and reasonable asset allocation strategy to achieve stable growth and effective management of personal wealth," stated a financial management company. A bank client manager also advised against blindly chasing higher interest rates due to declining rates, as risks are generally accompanied by returns. The decline in bank deposit rates may pose a challenge for investors, and it is essential to maintain long-term faith and utilize diversified asset allocation methods to better achieve wealth growth.
