(Yicai Global) June 27 -- Despite falling interest rates, large-sum certificates of deposit at Chinese banks are becoming the focus of fierce competition among depositors and some listed companies have even used idle funds to buy CDs in the name of wealth management.

Several bank relationship managers told Yicai Global that although interest rates on large CDs are significantly lower now than that at the start of the year, the number of customers making enquiries and buying them is surging.

As demand for large CDs among depositors soars, insiders note that demand is outstripping supply.

The rate on large CDs at commercial banks is generally higher than that of their time deposits of the same maturity.

“There is no quota for three-year certificates of deposit with higher interest rates, and there are only a few two-year certificates left,” according to an accounts manager of a large state-owned bank.

The bank’s latest three-year large-sum CD sold out in just half an hour, even though investors needed to have had an account with the lender for more than six months, he added.

The relationship manager at another bank said the rate on its large CDs is still about 4 percent. Apart from supplying some high-quality clients, whether other customers can buy the certificates comes down to how good they are at using the bank’s app, network quality, and simple luck.

The fact that these certificates are so sought-after is not due to low supply. According to data from the People’s Bank of China, financial institutions issued a total of CNY5.5 trillion (USD762.3 billion) of big-sum CDs in the first quarter, an increase of CNY1.1 trillion from a year earlier. That was the highest quarterly issuance since the product was first launched in 2015, the PBOC added.

Some listed firms are also buying big CDs. Per data from Eastmoney.com’s Choice, as of June 6, a total of 156 listed firms had set out plans to buy large-sum CDs since the start of 2023 to the tune of CNY1.5 billion (USD208 million).

The rush to CDs shows that people are more inclined to invest in deposit products with greater security at a time when the economic recovery is not stable, income growth is slow, and expectations for stock and property market returns are low, said Liu Yinping, an analyst at Rong360 Digital Technology Institute.

As a result, the overall investment style tends to be conservative, Liu added.

Editors: Tang Shihua, Peter Thomas