SHANGHAI: Stocks in China struggled for direction on Tuesday as lending data in October signalled soft credit demand, adding to signs that the recovery process in the world’s second-largest economy was still complicated.
The blue-chip CSI 300 Index was flat at 0.1%, while the Shanghai Composite Index gained 0.3% at market close.
Hong Kong’s Hang Seng Index slipped 0.2% and the Hang Seng China Enterprises Index was down 0.4%.
Chinese banks extended 738.4 billion yuan ($101.3 billion) in new yuan loans in October, down from 2.31 trillion yuan in September, but exceeded analysts’ expectations.
“October’s credit and money data were mixed, but the composition of credit and loans data showed soft credit demand,” Goldman Sachs said in a note, adding they continue to expect another 10bps policy interest rate cut and 25bp RRR (reserve requirement ratio) cut before the end of this year.
Recent economic data showed more signs of renewed weakness, said Ting Lu, chief China economist at Nomura. “Export growth weakened again in October despite the lower base. CPI inflation dipped into negative territory again.”
“Growth stabilisation is not solid,” he said, adding that Beijing needs to take stronger action to rescue the property sector and clean up local government debt to secure a more sustainable recovery.
Market participants will focus on the talks between US President Joe Biden and Chinese President Xi Jinping on Nov. 15 to gauge sentiment between the world’s two biggest economies.
In onshore markets, securities brokers rose 1.2%, while coal miners lost 1.1%.
China International Capital Corp jumped 8.2%, and China Galaxy Securities surged 4.5%. Both firms denied rumours of a planned reorganisation or merger of the two a day earlier.
Tech giants listed in Hong Kong declined 0.7%.
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