Salting away money in banks has overtaken securities trading as the most popular investment option for Shanghai residents. According to a People's Bank of China (Shanghai) quarterly survey, about 42.4 per cent of residents, against 34 per cent three months ago, preferred to put money in banks despite five interest-rate cuts. Three months ago, stock investment was the most popular option among Shanghai residents. Analysts said the findings reflected a national trend and could be worrying, as they meant Beijing's interest-rate cuts had failed to lure money out of a banking system inundated with savings. 'Massive savings are only useful if they are converted to productive uses,' a foreign economist said. Banks are not lending more to state enterprises for fear of loan defaults, forcing Beijing to issue a record level of treasury bonds this year to attract money out of the banking system to infrastructure spending. The country's personal savings climbed 16.8 per cent to reach 4.99 trillion yuan (about HK$4.64 trillion) in the first six months. Analysts said the findings of the Shanghai survey suggested the high savings pattern was unlikely to be affected by the last interest-rate cut on July 1. The sample survey is conducted every three months to see how residents view economic prospects, investment opportunities, and spending patterns. Shanghai Securities News reported that 30.7 per cent of respondents rated stock investment as their main investment vehicle, making it the second most popular choice. Analysts said falling interest in stocks came with declining share prices of stocks on the Shanghai stock market. 'When share prices fall, it is natural investor interest in the markets also falls,' a mainland bank economist said. By yesterday, the Shanghai Composite Index - which tracks movements in A- and B-share markets - closed at 1,178.37 points, down 17 per cent from its June high of 1,422.97 points. Stock analysts said the decline was more evident in the secondary stock markets than in initial public offers (IPOs), which still attracted about 200 billion yuan an issue in subscription monies. Haitong Securities analyst Hu Shugaung said: 'We are still looking at a price-earnings multiple of 35 in the secondary market, compared with 15 for IPOs. 'That means anyone who is lucky enough to subscribe successfully to any new issue will make money when the stock makes its debut,' he said. The mainland media had estimated that institutional and retail investors had deposited about 340 billion yuan with brokerages as subscription monies for new issues. 'What is deposited with brokerages is used primarily for IPOs and is hardly invested in the secondary market, where current returns are low,' Mr Hu said.