China’s health-care stocks fell the most since November on concern the shares are overvalued given their earnings growth prospects.
Harbin Pharmaceutical Group Co., which makes penicillin, slid 7.9 percent to 20.45 yuan at 2:20 p.m. in Shanghai, narrowing gains for the past 12 months to 47 percent. The health-care index lost 4.8 percent, trimming this year’s gains to 4 percent. It slid the most among the 10 industry groups in the CSI 300 Index.
Liu Xiaoming, an analyst at Guoyuan Securities Co., said investors were selling drugmakers after recent rallies pushed reported price earnings for the industry measure to 25 times compared with 18 for the CSI 300 Index.
Orient Securities Co. analyst Li Shuhua said reports from the Xinhua News Agency and Shanghai Daily that the deputy director of China’s State Food and Drug Administration is under investigation for suspected disciplinary violations were also spurring sales.
“The bad news is like a catalyst,” Li said. “Institutions had felt the value was too high even before so they are selling now.”
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