SOURCE / COMPANIES
US-listed education stocks plunge after reports of strict crackdown on private education industry
Published: Jul 24, 2021 03:36 AM
Primary students do homework at an after-school care center in Yuping Dong autonomous county in Southwest China's Guizhou province, Feb 27, 2019.Photo:Xinhua

Primary students do homework at an after-school care center in Yuping Dong autonomous county in Southwest China's Guizhou province, Feb 27, 2019.Photo:Xinhua


 
US-listed Chinese education stocks plunged on Friday after reports of a government crackdown on the private education industry that includes a ban on foreign investment.

The stock of New Oriental Education and Technology fell more than 60 percent, and TAL Education triggered a temporary suspension of trading due to excessive volatility, and fell 53 percent before the suspension.

It is widely believed the plunge was due to that Chinese authorities tightened restrictions on the private education industry and strengthened the scrutiny of domestic companies listed overseas.

Caixin.com reported on Friday that Chinese authorities have released document for the education and training industry, and the document said capitalization operations are strictly prohibited in the tutor industry. Subject training institutions are not allowed to go public for financing, and listed companies are not allowed to invest in subject training institutions through the stock market.

The reports said that at the stage of compulsory education, all regions must no longer approve new education and training institutions. Foreign capital is not allowed to participate in academic training institutions through mergers and acquisitions.  
 
The reports also said tutoring firms may be turned into non-profit institutions.

The document also stipulates that off-campus training institutions shall not occupy holidays and winter and summer vacations to organize subject training and the training time shall not be later than 21:00.

New Oriental Education and Technology said on Friday that these regulations have not yet been announced, and the company has not received any formal notifications about these regulations.

Xinhua News Agency reported on May 21 that President Xi Jinping chaired a meeting, which recognized the heavy burdens placed on primary and secondary school students as the most prominent problems in compulsory education, and stressed the regulation of after-school training institutions.

The meeting said it is necessary to fully regulate the off-campus training institutions, and strictly prohibit arbitrary capitalization for the industry.
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