China stocks close lower as December lending, consumption outlook weigh

China shares closed lower on Thursday after new bank lending fell more than expected in December from the previous month, with consumption stocks leading the decline amid local COVID-19 outbreaks.

China shares closed lower on Thursday after new bank lending fell more than expected in December from the previous month, with consumption stocks leading the decline amid local COVID-19 outbreaks. The blue-chip CSI300 index fell 1.6% to 4,765.92, while the Shanghai Composite Index lost 1.2% to 3,555.26.

** Chinese banks extended 1.13 trillion yuan ($177.56 billion) in new yuan loans in December, down from 1.27 trillion yuan in November, but lending for the full year of 2021 set a record. ** China's inflation rose slower than expected in December, while the country is battling with its latest outbreaks of COVID-19, with the Omicron variant detected in several cities.

** "Although the Omicron outbreak and lower CPI inflation in December increase the likelihood of a slight cut in the PBoC's policy rates in the near term, we believe the space remains quite limited, and the impact of a rate cut may also be quite small, especially if the long-term LPR is not revised down," Nomura said in a note. ** Consumer staples tumbled 3%, with liquor makers down 3.5% amid COVID-19 outbreaks and tightening curbs on movements between regions that clouded the outlook for the sector.

** Real estate developers dropped 2.8%, as sentiment soured with more developers scrambling to negotiate new terms with their bondholders to avoid defaults. ** Information technology, healthcare and semiconductor stocks lost between 1.7% and 2%.

** However, energy stocks gained 1.3%, with coal miners up 1.9%.