Concerns about a Chinese government crackdown on after-school tutoring hammered shares in Chinese education stocks.
Shares in New Oriental Education & Technology Group Inc. and rival TAL Education Group traded about 54% and 71% lower, respectively, in New York on Friday. Earlier in the day, New Oriental’s Hong Kong-listed shares fell 41%.
An unverified document, circulating among investors and seen by The Wall Street Journal, appeared to be an official communication detailing new, tougher guidelines for the sector.
New Oriental and TAL said in separate statements Friday that no regulations had been published by the government and neither company had received official notification. They said they won’t comment on market speculation.
In a worst-case scenario, if teaching on weekends and holidays were banned and after school tutoring had to be done on a nonprofit basis, market leaders could lose more than 70% of the revenue they make teaching children from kindergarten through 12th grade, analysts at Citigroup said in a report Friday.
