Chinese Covid jab makers hit after US backs plan to halt patents

Shares in Chinese makers of Covid-19 vaccines tumbled after Washington backed a proposal to temporarily suspend intellectual property rights for the jabs.

In afternoon trading on Thursday, Fosun Pharma lost 9 per cent, CanSino Biologics 14 per cent and Walvax Biotechnology 10 per cent. ChiNext, a tech-focused index of companies listed in Shenzhen, fell 2.2 per cent while the broader CSI 300 of China’s biggest stocks dropped 1.1 per cent.

The market moves underscored the international repercussions of the US announcement on Wednesday, which stands to increase the global supply of vaccines.

A waiver would allow any pharmaceutical manufacturer to make “copycat” vaccines without fear of being sued for IP infringement. The measure was proposed at the World Trade Organization last year and has been backed by almost 60 countries.

The development hit the shares of big pharmaceutical groups late in the trading day on Wall Street on Wednesday. Moderna, BioNTech and Novavax closed down by between 3 and 6 per cent.

The S&P 500 closed up 0.1 per cent, paring earlier gains.

The falls in the Chinese stock market mean the CSI 300 is down 2.9 per cent this year. The index has lost 13 per cent since touching an all-time high in February, surpassing the previous peak of 2007, on the country’s rapid economic recovery from the pandemic.

Andy Maynard, a Hong Kong-based trader at investment bank China Renaissance, pointed to a “multipronged set of negativity” in the market. That included concerns over lingering US-China trade tensions and other economies catching up with China’s recovery, as well as the hit to the healthcare sector.

China’s economy “went back to relative normality in the third quarter of 2020, [and] now everywhere else is playing catch-up”, he said.

In China, where trading resumed after a three-day break for a public holiday, sentiment was also soured by geopolitical tensions. The National Development and Reform Commission said in a statement that it would “indefinitely suspend all activities under the framework of the China-Australia Strategic Economic Dialogue”, citing the “current attitude” of Canberra.

The move represented a further escalation in tensions between the countries that over the past year has resulted in tariffs on Australian exports including wheat, beef and wine.

Elsewhere in the region, Japan’s Topix rose 1.5 per cent and Hong Kong’s Hang Seng gained 0.6 per cent. South Korea’s Kospi benchmark added 1 per cent.

In commodities, the international oil benchmark Brent crude was flat at $68.98 a barrel.