Education suppression triggered a sharp sell-off in China’s stock market

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Asia Pacific Stock Market Update

Global investors dumped nearly US$1 billion in Chinese stocks on Monday as Beijing’s suppression of education companies raised concerns about further tightening of regulations in the world’s second-largest economy.

During the Asian morning, investors sold 6.45 billion yuan (US$995 million) worth of stocks in the Shanghai and Shenzhen stock markets through the Hong Kong market linkage.

Beijing’s ban on academic tuition groups over the weekend triggered market turmoil Profit from, Raise funds or go public. The news of these measures was announced through a leaked memo, which was later confirmed that the market value of the three major companies in the industry lost about $16 billion on Friday.

The decline continued on Monday. China’s benchmark CSI 300 Index fell nearly 3%, while the index of education stocks fell nearly 10%. In Hong Kong, the China Enterprises Index fell 3.7% and the Hang Seng Index fell 2.9%. The Hang Seng Technology Index once fell 6.6%, the biggest one-day drop in nearly a year.

Investors stated that the crackdown was carried out after regulators took measures to control financial and technology companies, including ride-hailing app Didi Chuxing And e-commerce group Alibaba raised concerns that no industry will avoid stricter supervision.

Frank Benzimra, head of equity strategy at Societe Generale, said: “The speed and intensity of these crackdowns is unprecedented.”

China’s After-school tutoring industry In recent years, it has developed rapidly as middle-class parents decide to enter the country’s top universities for their children’s advantages in the exams. But the reforms outlined in the leaked documents aim to “effectively” reduce students’ academic burdens and family education expenditures within a year.

As one of the heavyweights in the industry, the Hong Kong-listed New Oriental Education shares plunged nearly 40% on Monday, and the stock fell by about 60% in two trading days.

In the past year, Beijing has continuously cracked down on fast-growing industries.The regulator cancelled Ant Group’s record US$37 billion initial public offering in November. Billionaire Jack Ma, At the last minute.

Followed by Broader strike Regarding technology groups, including antitrust investigations on Ant’s subsidiary Alibaba and other large e-commerce platforms. Soon after Didi went public in New York this month, New rules Introduce an overseas listing management system for Chinese companies whose data collection activities cover more than 1 million users.

Dickie Wong, head of research at Hong Kong brokerage Kingston Securities, said: “We cannot say which industry the next Chinese government wants to exercise more control over.” “This will cause fear and selling pressure in the short term.”

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