China stocks close lower as domestic credit growth overshadowed by US inflation

SHANGHAI: China stocks closed lower on Friday as faster credit growth in January failed to boost investor sentiment, while concerns over more aggressive US interest rate hikes after red-hot inflation data also weighed.

The blue-chip CSI300 index fell 0.8%, to 4,601.40, while the Shanghai Composite Index lost 0.7% to 3,462.95 points.

** For the week, the CSI300 index edged up 0.8%, while the Shanghai Composite Index jumped the most in five months by 3%.

** New bank lending in China more than tripled in January from the previous month, beating forecasts and hitting a record high. Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, also accelerated, touching a six-month high.

China shares fall on profit-taking, foreign outflows

** "The demand from the real economy is still quite weak, particularly property demand has not recovered," said Zhiwei Zhang, chief economist at Pinpoint Asset Management, as "most of the growth comes from short term loans and bill financing. Medium and long term loans to households (mainly mortgages) actually declined from last year."

** "(A-share market) sentiment could stay range-bound on macro uncertainties, Omicron, upcoming earnings season and US-China tension re-escalation," said Morgan Stanley in a note.

** The US consumer prices rose sharply in January, leading to the biggest annual spike in inflation in 40 years, which could fuel financial market speculation for a 50-basis point interest rate hike by the Federal Reserve next month.

** Chinese real estate developers gained 1.2% after a media report that China will allow real estate firms easier access to presale proceeds from residential projects, loosening a liquidity squeeze on the sector.

** Financials stocks and energy firms went up 1% and 1.5%, respectively.

** Insurers gained 2.6%, with China Life Insurance Co jumping 7.3%.

** However, the start-up market ChiNext tumbled nearly 3%.

** The healthcare sector plunged 3.2%, new energy shares lost 2.3%, and semiconductors closed 1.4% lower.