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By Bloomberg

Chinese technology stocks plunged, sending a benchmark index toward a bear market, on concern a 171 percent 12-month surge had pushed valuations too high.

The CSI 300 Information Technology Index slumped 8.4 percent at the 11:30 a.m. local-time break in Shanghai, taking its decline from a June 2 peak to 26 percent. Valuations on the measure retreated to 68 times reported earnings, down from as much as 86 times earlier this month. They remain more than twice as high as the Nasdaq Composite Index.

“There are concerns across the board about valuations in the market,” said Binay Chandgothia, a portfolio manager at Principal Global Investors in Hong Kong. “Outside bank stocks, a lot of companies are trading at very high valuations.”

As China’s historic equity rally shows signs of faltering, with benchmark indexes heading for their first back-to-back weekly declines since February, the industries that led gains are being punished the most. The technology-dominated ChiNext index, which has doubled in 2015, headed for its biggest drop on record on Friday.

Only one of the ChiNext’s 100 members advanced, while more than 20 slumped by the 10 percent limit.

“The correction makes as little sense from a fundamental point of view as the way up,” said Mikio Kumada, a strategist at LGT Capital Partners Ltd. in Hong Kong. “It’s just people selling it because it’s falling, just like before, it was people buying it because it’s rising.”