Bird flu fears spark stock stampede
Rush into drug plays as speculation mounts over how outbreak of new strain will develop
Domestic drug makers surged on mainland stock exchanges yesterday as investors rushed into the sector on speculation a new strain of bird flu could spread further and create a spike in demand for related medicines.
Analysts said capital would continue flowing into drug makers and that valuations, already about 25 times price to forward earnings (forward PE) on average, could go even higher as public panic mounts over the as yet unnamed disease.
The H7N9 strain of avian flu is a statutorily notifiable infectious disease in Hong Kong. There is so far no vaccine for it.
Shenzhen Neptunus Bioengineering, Shandong Lukang Pharmaceutical, Guilin Layn Natural Ingredients and Beijing Tiantan Biological Products - four pharmaceutical firms that make vaccine or antibiotic products - rose by the daily limit of 10 per cent in Shanghai and Shenzhen. Antibiotics are medicines that treat infections, while vaccines are used to provide immunity to specific infections.
If no cure is found for the bird flu or [if there are] more new cases, more speculative investors will join in. Investors fear this could become another Sars
"If no cure is found for the bird flu or [if there are] more new cases, more speculative investors will join in. Investors fear this could become another Sars," Shanghai-based UOB Kay Hian analyst Wang Aochao said.