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The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the “Opinions on Further Reducing the Burden of Compulsory Education Students’ Homework and Off-campus Training” (referred to as the “Opinions”) on July 24, stating that all discipline training institutions shall not be listed for financing, and capital is strictly prohibited. Operation. All regions no longer approve new subject-based off-campus training institutions for students in the compulsory education stage, and existing subject-based training institutions are uniformly registered as non-profit institutions. China Education stocks suffered a sharp drop on the 23rd. New Oriental fell more than 60%. Fortunately, due to excessive fluctuations, it once triggered a circuit breaker and fell 53.07% before the circuit breaker.
The “Opinions” pointed out that all discipline training institutions must not be listed for financing, and capitalized operations are strictly prohibited; listed companies must not invest in discipline training institutions through stock market financing, and must not purchase the assets of discipline training institutions through the issuance of shares or payment of cash; foreign capital is not allowed. Through mergers and acquisitions, entrusted operations, franchise chains, and the use of variable interest entities, they hold or participate in academic training institutions. Those who have violated the regulations shall be cleaned up and rectified.
The “Opinions” stated that the previously filed online discipline training institutions were changed to an examination and approval system. All provinces (autonomous regions and municipalities directly under the Central Government) shall conduct a comprehensive investigation on the online discipline training institutions that have been filed, and re-approve the approval procedures according to the standards. If the approval is not passed, the original filing registration and Internet Information Service Business License (ICP) shall be cancelled. For non-disciplinary training institutions, localities should distinguish sports, culture and art, science and technology and other categories, clarify the corresponding competent departments, formulate standards by category, and strictly review and approve. Strictly investigate and deal with off-campus training institutions that do not have the corresponding qualifications and conduct training in multiple locations without approval in accordance with laws and regulations.
Related news was reported by the media earlier this week, and China’s education stocks plummeted due to concerns about the authorities’ crackdown on extracurricular tutoring. On July 23, when the US stock market opened, the Chinese education stocks suffered a severe fall. New Oriental fell more than 60%, Good Future fell more than 57%, Gaotu fell more than 58%, and Youdao fell more than 36%. Subsequently, due to excessive fluctuations, Hao Future triggered a fuse once, and fell 53.07% before the fuse.
On the same day, online education stocks in Hong Kong stocks plummeted. New Oriental plunged over 50%. As of the close, New Oriental’s stock price was 30.2 Hong Kong dollars, a 40.61% drop, and nearly 40 billion Hong Kong dollars in market value, which was the largest single-day drop in history. In addition, the Hong Kong stock market Sigle Education fell 28.53%, and Excellent Education Group fell 21.48%. Before the official announcement of the policy, New Oriental and Good Future issued separate statements on Friday stating that the government has not issued any regulations and neither company has received an official notification. They said they would not comment on market rumors.
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