China’s education stocks tumble amid new sweeping rules in private tutoring
Beijing continues to curb the power of its domestic powerful corporations. The leeway such giants as Didi and Alibaba used to enjoy seems to have come to an end. However, the local authorities have gone one step further. This time, they have cracked down on its after-school tutoring sector.
China has unveiled an overhaul of its $100 billion education tech sector. The government is planning to ask its national tutoring firms to turn non-profit .
Thus, the country is about to ban companies that teach the school curriculum from raising money via listings or other capital-related activities. Besides, they could be forbidden from being sold to firms whose shares are traded on stock exchanges. Investments from third-party firms may also be prohibited. Furthermore, the authorities are considering a ban on foreign capital.
There are also a whole bunch of new rules. However, they are still under consideration and may well be changed. Nevertheless, most Chinese tutoring stocks have already lost almost half of their value.
The crackdown with new rules and investigations has wiped billions of dollars from Chinese stock markets. Thus, Hong Kong's benchmark Hang Seng Index reached its lowest close since last November, retreating by more than 10% in three days. For now, only local markets are suffering losses. However, a chain reaction that may affect global markets cannot be excluded.