Beijing tutoring crackdown slams Chinese stocks listed in US

Photo by Bruce Röttgers on Unsplash

Fears of increased of regulation from Beijing crushed U.S.-listed Chinese stocks on Friday following a Chinese government crackdown on private educators.

U.S. shares of TAL Education Group and New Oriental Education & Technology Group Inc, which provide tutoring and test preparation services in China, each dropped more than 50% after news that the government is barring tutoring for profit in core school subjects to ease financial pressures on families that have contributed to low birth rates.

Heavyweight Chinese internet stocks also deepened a recent selloff as the move by China added to concerns about increased regulation of Chinese companies listed on Wall Street. Alibaba and Baidu both lost 4% and Didi Global tumbled 20%.

A broad crackdown on China’s massive internet sector has already rattled investors. Beijing launched a data-related cybersecurity investigation into ride-hailing giant Didi Global Inc just two days after it raised $4.4 billion in a New York initial public offering. Didi has fallen over 40% from its June 30 IPO price, while Baidu has tumbled 50% from its February record high and Alibaba is down 35% since October.

“A lot of the fast-money types had recently been trying to catch a falling knife, and some of these stocks started to look OK. But today looks like a complete capitulation, where guys can’t stomach the pain of regulatory uncertainty. People have just given up,” said Joel Kulina, a senior trader at Wedbush Securities who specializes in technology stocks.

The policy change threatens to decimate China’s $120 billion private tutoring industry and imperils the listing ambitions of numerous venture capital-backed education firms, including Alibaba-backed Zuoyebang, and online education platforms Yuanfudao and Classin, both backed by Tencent.

The KraneShares CSI China Internet ETF sank about 9%, leaving it down almost 30% year-to-date.

Reuters

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.