Underwhelming Chinese loan data prompted a selloff in the country's stock markets Tuesday, but some analysts say the data is good news as it signals China's credit problems are decreasing.
Hong Kong's Hang Seng was down near 2 percent by mid-afternoon in Asia, while the Shanghai Composite fell 1.4 percent, as investors interpreted the credit growth slowdown as another sign that China's economy is cooling, ahead of Wednesday's gross domestic product data.
According to global research house Capital Economics, the slump in credit growth shows authorities are starting to get credit woes under control.
"Despite a surge in bank loans and relatively loose interbank liquidity conditions in March, today's data show that the credit slowdown is still on track," said Julian Evans-Pritchard, China economist for Capital Economics.
"Much of the slowdown in broad credit continues to be in corporate bonds and trust loans, where a couple of high-profile defaults and a growing awareness of credit risks appear to have dampened investor demand," he added.
Investors have long been concerned about China's burgeoning credit market - particularly amid rising levels of shadow banking and an astronomical local government debt pile. Last month, the country's first domestic bond default in recent history underscored these worries.