SHANGHAI: China stocks fell the most in more than seven months on Monday, as a lower-than-expected 2021 economic growth target from Beijing sparked concerns that Chinese officials could tighten policy to rein in lofty valuations. The blue-chip CSI300 index fell 3.5% to 5,080.02, posting its worst day since July 24, 2020. The Shanghai Composite Index lost 2.3% to 3,421.41.

Leading the declines, the CSI300 consumer staples index and the CSI300 healthcare index slumped 5.7% and 6.4%, respectively, while the CSI new energy index dropped 5.3%.

China on Friday set a modest annual economic growth target, at above 6%, which was significantly below the consensus of analysts, who expect growth could beat 8% this year.

“China has become the most expensive market for non-financial equities among major markets globally. Meanwhile, the National People’s Congress declared a very conservative growth target, creating room for policymakers to take action to contain risks of asset bubble in both equities and property,” Citi Private Bank analysts, including Ken Peng, said in a note.

Citi said that more restrained credit growth could lead to lower valuations in the coming months.

“Some sectors favoured by both global and domestic consumers saw their valuations and multiples re-rate above average multiples that these stocks used to trade on,” said May Ling Wee, China portfolio manager at Janus Henderson Investors.

Analyst also expected a weaker yuan to dampen the appeal of Chinese stock to foreign investors.

On Monday, foreign investors sold a net 6.4 billion yuan ($982.11 million) worth of A-shares via the Stock Connect linking mainland and Hong Kong, according to Refinitiv data. There was a muted reaction to data showing that China’s February exports grew at a record pace from a year earlier, while imports rose less sharply.