[Epoch Times, July 24, 2021](Epoch Times reporter Liu Yi comprehensive report) On July 23, the Chinese education stocks plummeted in the Hong Kong and US stock markets. The leader New Oriental fell more than 40% in both places. The sharp drop in China’s education stocks is related to a document posted on the Internet by the Chinese Communist Party to clean up off-campus education and training institutions.
Based on news from the mainland, Hong Kong and Taiwan media, on the 23rd Beijing time, China Education stocks plunged in the Hong Kong stock market. New Oriental plunged more than 50% at one time; Sigle Education, New Oriental Online, and Excellent Education also plunged by more than 20%.
As of the end of the afternoon, New Oriental plummeted 40.61%, the largest one-day drop in history, Sigle Education fell 28.53%, and Excellence Education Group fell 21.48%. Data show that since the beginning of the year, New Oriental’s stock price has fallen by nearly 80%.
At the same time, China Education stocks also plummeted in pre-market trading on the 23rd in U.S. stocks. Good Future fell by nearly 50%, Gaotu fell by more than 50%, and New Oriental fell by more than 40%.
As of the close on Friday (23rd) Eastern Time, Good Future fell 70.47%, and a circuit breaker was triggered during the session; Gaotu Group fell 63.36%, New Oriental fell 54.22%, Youdao fell 42.77%, Elite Education fell 35.70%, Hong En Education Fell 21.73%.
The reason for the sharp drop in the China Education Stocks was revealed to be related to the “Opinions on Further Reducing the Burden of Students’ Homework and Off-campus Training in Compulsory Education” published by the Chinese Communist Party authorities on the Internet.
“21st Century Business Herald” news on July 23 shows that the media learned from relevant persons of the Ministry of Education that the above-mentioned documents have been issued in the education system.
The document uploaded on the Internet was issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council on July 19, and the scope of printing and distribution is “county regiment level.”
The fourth article of the document is to strictly manage and standardize off-campus training. The content includes “disciplinary training institutions shall not be listed for financing, and capitalization operations are strictly prohibited; listed companies shall not invest in discipline training institutions through stock financing, and shall not purchase subject training assets by issuing shares or paying cash; foreign capital shall not be acquired through mergers and acquisitions , Entrusted operations, franchise chains, and the use of variable interests are collective holdings or equity participation in training institutions. Those who have violated regulations must be cleaned up and rectified.”
The Daily Economic News reported on the 23rd that CICC’s comments believe that the strictness of the standard management in the education and training industry is unprecedented in history. Moreover, due to the large uncertainty in the specific implementation of the policy, the income and profit impact calculations and target price adjustments of listed companies in education and training are carried out.
CICC lowered its target price for New Oriental by 53%; lowered its future target price by 67%; and lowered its target price for New Oriental Online by 70% to HK$12.2.
However, in the face of the sharp drop in stock prices, several companies such as New Oriental and Good Future have issued announcements in response, saying that the above-mentioned online “regulations” have not been announced and have not been notified.
On July 23, K12 Education Company said that it had noticed some media reports that the company has not received any official notification from the regulatory authorities. The company does not comment on market speculations.
Gaotu also issued a similar announcement to Good Future, stating that the online transmission regulations have not yet been announced and the company has not received any formal notice.
Editor in charge: Li Qiong
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