Shares of education firms tumble following China’s ban on private kindergartens going public

Source:Global Times Published: 2018/11/16 16:33:40

Shares of online education companies and pre-school-related sectors slumped on Chinese bourses on Friday following a new preschool education policy that bans private kindergartens from going public.

The new policy is seen as part of the government's efforts to tighten oversight of preschool teachers following public outcry over cases of child abuse at private kindergartens across the country.

Shares of Shanghai Only Education and Technology Co. dropped 2.28 percent on daily basis and closed at 22.27 yuan ($3.21) at the Shanghai Stock Exchange. Several A-share listed education firms also saw their shares drop by the daily limit of 10 percent and were halted by midday trading.

Shares of a major Chinese private education company, RYB Education Inc, which is listed on the New York Stock Exchange, plummeted nearly 53 percent to close at $7.83 on Thursday. The company was entangled in a scandal in November 2017 involving a 22-year-old teacher at an RYB kindergarten in Beijing's Chaoyang district who pricked children with needles.

The new policy unveiled on Thursday by the State Council, China's cabinet, promises to increase financial input into preschool education and further regulate the industry.

Governments at all levels are encouraged to establish public kindergartens to enroll half of all preschool children in public education by 2020, the document said. Private kindergartens are not allowed to sell shares either by themselves or as part of asset packages, the document said.

RYB said on Friday that it will soon adjust its corporate strategy, but will wait for further instructions on whether it would delist from stock exchanges, according to media reports.



 



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