Stock markets end lower despite strong credit growth in March

China’s A-share markets reversed their gains on Monday, with the three major indexes all retreating into negative territory, despite data showing strong credit growth for March.

The Shanghai Composite Index fell 0.34 percent, or 10.84 points, to finish at 3,177.79, after gaining more than 2 percent during morning trading.

Sentiment was largely lifted by the higher-than-expected credit data released by the central bank on Friday.

In March, China’s total social financing credit, a broad measure of credit and liquidity in the economy, increased to a higher-than-expected 2.86 trillion yuan (US$420 billion). 

The main surprises were a significant pick-up in new bank loans and a revival of shadow credit, said Wang Tao, chief economist at UBS Securities.

The Shenzhen Component Index slumped 0.78 percent to end at 10,053.76 points, while the ChiNext Index was down 1.70 percent at 1,666.90 points.

The combined turnover of the two bourses was 775.7 billion yuan, up from 657.1 billion yuan on Friday.

Carmakers led the losses, with state-owned Jiangling Motors dropping 9.98 percent to27.95 yuan. Agricultural stocks and communication companies were also among the big losers.

Zhu Bin, a senior strategist at Southwest Securities, forecast the world’s second-largest economy will see a higher economic growth in the first half of 2019 before slowing in the second half, Caixin.com reported.

The credit data confirmed a strong real economy, he said. The government ushered in a new round of credit-easing in October when the growth in social financing bottomed out.