China stocks climb as five banks slash interest rates

China stocks extended gains on Friday after five major state banks cut interest rates on some deposits. Meanwhile, Tencent and Netease stocks dragged down Hong Kong shares after China has issued draft rules for online game management.

The blue-chip CSI 300 Index rose 0.7 per cent, and the Shanghai Composite Index added 0.5 per cent.

Meanwhile, Hong Kong's Hang Seng Index fell 0.4 per cent, and the Hang Seng China Enterprises Index lost 0.7 per cent.

Shares of gaming giant Tencent and Netease slumped 7.2 per cent and 12.2 per cent respectively. The Hang Seng Tech index shed 1.5 per cent.

Asian stocks were set to eke out gains for the final full trading week of the year, while the dollar eyed a loss as investors look to 2024 as a year of steep US rate cuts.

Among China's largest state banks including Agricultural Bank of China and China Construction Bank, cut interest rates on some deposits from Friday providing room to reduce lending costs as the government urged banks to support the economy.

"Lower deposit rates should help alleviate pressures on bank net interest margins (NIM) and lay the groundwork for the PBoC to cut its policy lending rates (OMO and MLF) in January," Ting Lu, chief China economist at Nomura said.

If these cuts materialise, it would signal Beijing has become increasingly concerned about the downward pressure on growth, the analyst added, saying that they expect the PBoC to cut its policy lending rates in January next year.

Shares of energy and new energy gained 1.5 per cent and 2.3 per cent respectively, predicted to lead gains, while media firms lost 2.4 per cent.

Additionally, China unveiled new draft rules for online video games, imposing strict rules on players' spending as Beijing continues to tighten regulations for the sector.

(With Reuters Inputs)