Hong Kong and mainland stock markets declined yesterday amid fears Beijing will freeze lending to cool runaway economic growth.
Mainland bank shares led the decline after the Wall Street Journal reported that the banking watchdog ordered banks to keep lending at last month's level to curb excess liquidity.
The China Banking Regulatory Commission denied it had made the instruction but conceded it was giving guidance to banks to slow lending if they had already had loan growth of 15 per cent or more this year.
The 15 per cent ceiling on loan growth was an 'informal guidance, not a hard target', said Lai Xiaomin, a spokesman at CBRC.
The Hang Seng Index fell 154.26 points or 0.56 per cent to close at 27,460.17 while the Shanghai Composite Index ended 46.457 points or 0.87 per cent lower at 5,269.817.
A mainland banking source said the CBRC had met with mainland and foreign lenders in the past two weeks and indicated that it was better for them to keep their lending at last month's levels.
'They asked banks to avoid overlending to the property sector but encouraged them to lend to sectors which the country wanted to develop,' the source said.
