HONG KONG—China confirmed it would take drastic steps to restrain the country’s booming after-school tutoring industry, prompting further selloffs in stocks such as New Oriental Education & Technology Group Inc. on Monday.
The restrictions, published over the weekend by state media,are the most recent regulatory assault on a fast-growing part of the Chinese economy. They follow a monthslong crackdown on various aspects of China’s technology industry that has rattled companies such as Alibaba Group Holding Ltd. , its unlisted sister company Ant Group Co., and ride-hailing giant Didi Global Inc.
New Oriental’s Hong Kong-listed shares, which had lost more than two-fifths of their value on Friday, crashed by an additional 37.5% on Monday morning in the city, giving the company a market value of about $4.2 billion, according to FactSet. The company, whose primary listing is in the U.S., has lost nearly $30 billion of market capitalization since its shares peaked in mid-February.
Investors have grown more worried about the industry’s prospects, as Beijing moves to tackle the spiraling educational costs that have helped deter many families from having more children.
Shares of smaller education companies tumbled, too, with Koolearn Technology Holding Ltd. slumping 31% by noon in Hong Kong. The city’s flagship Hang Seng Index dropped 3%, as sector heavyweight Tencent Holdings Ltd. led a broader technology selloff.