China Education Stocks Plunge, Highlighting Policy Risks Facing Investors
Shares in Chinese education companies that tutor students on school curriculum plunged today on reports that the government may ask them to convert to non-profits, highlighting anew risks facing investors in the country’s stocks.
Rules being mulled would likely no lower allow those businesses to raise capital or go public, according to a Bloomberg report that cited people familiar with the matter. Listed firms would “also probably no longer be allowed to invest in or acquire education firms teaching school subjects while foreign capital will also be barred from the sector, one of the people said,” Bloomberg reported.
Shares in New Oriental Education, an education industry leader, plunged by 40% in Hong Kong; U.S.-traded TAL, another leader, fell by nearly 50% in pre-market trading. New Oriental Chairman Michael Yu was worth $2 billion on the Forbes Real-Time Billionaires List earlier today; TAL Chairman Zhang Bangxin was worth $3.8 billion.
The reported possible education industry shift follows a sweeping Chinese government probe of ride-hailing industry leader DiDi Global that was announced just days after its U.S. IPO and that led to plunge its shares this month.
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