SYDNEY: China's lending slowdown may benefit the domestic economy by reducing risk and investors should still buy shares of the nation's banks, investor Mark Mobius said.

"I don't see a slowdown in lending as a bad thing," Mobius, who oversees about $34 billion in emerging markets funds as chairman of Templeton Asset Management Ltd, said yesterday. "It moderates risk to some degree because people don't go overboard."

Chinese banks have begun restricting new loans, responding to a push by regulators to contain credit after a surge in lending in the first half of this month, according to people familiar with the situation. That's stoking concern a government clampdown on lending will slow growth in the world's third largest economy.