China Stocks Plummet Amid Lowest Lending Levels in 15 Years

In a significant market shift, Chinese stocks plummeted to their lowest levels in six months, driven by data revealing a substantial tumble in new yuan loans. According to the People's Bank of China, banks extended 260 billion yuan ($36.28 billion) in new loans in July, an 88% decline from June and an indicator of tepid credit demand.

The CSI 300 Index closed 0.8% lower, and the Shanghai Composite Index dropped by 0.6%. This trend contrasted with other Asian markets, which showed positive movement. As a result, investor sentiment appeared fragile, raising concerns over economic stability and potential central bank interventions.

Goldman Sachs analysts noted the prospect of a 25-basis-point cut to the reserve requirement ratio in Q3 and a 10-basis-point policy rate cut in Q4 to mitigate the impact on the economy. Meanwhile, various sectors including consumer staples and real estate lagged, exacerbating the market's decline.

(With inputs from agencies.)