Thursday, 21 January 2010

China limits lending

The tightening trend in China is becoming more apparent by the day. From Bloomberg on Wednesday:

China has told some banks to limit lending and will restrict overall credit growth in the nation to 7.5 trillion yuan ($1.1 trillion) this year, banking regulator Liu Mingkang said.

Some lenders were asked to rein in credit because they failed to meet regulatory requirements including those for capital, Liu, chairman of the China Banking Regulatory Commission, said in an interview today in Hong Kong. New loans in the first 10 days of this year were “relatively high,” he told the Asian Financial Forum.

The news hit stocks in China and the rest of Asia.

Chinese stocks slid, dragging the region’s benchmark to its third straight decline, after regulators told some of the nation’s banks to limit lending. The dollar gained against 14 of 16 of the most-traded currencies.

The Shanghai Composite Index lost 2.9 percent and Hang Seng Index slipped 1.9 percent, leading declines in Asia. The Morgan Stanley Asia Pacific Index fell 0.7 percent to 124.44 at 5 p.m. in Tokyo...

Stocks in Europe weren't spared.

European shares fell the most in six weeks, retreating from a 15-month high for the Dow Jones Stoxx 600 Index, on concern that China, the driver of the global recovery, may rein in stimulus measures...

The Stoxx 600 slid 1.5 percent to 256.3, the biggest decrease since Dec. 8. The measure has surged 62 percent since March as record-low interest rates and about $12 trillion committed by governments worldwide to revive economic growth boosted equities.

Nor were those in the US.

U.S. stocks slid, with the Standard & Poor’s 500 Index retreating from a 15-month high, as results at companies from International Business Machines Corp. to Morgan Stanley disappointed investors and China curbed lending...

The Standard & Poor’s 500 Index sank 1.1 percent to 1,138.04 at 4:05 p.m. in New York and earlier lost as much as 1.8 percent for its biggest intraday drop since November. The Dow Jones Industrial Average tumbled 122.28 points, or 1.1 percent, to 10,603.15. The Nasdaq Composite lost 1.3 percent to 2,291.25, trimming its gain for 2010 to less than 1 percent.

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