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Shares of Chinese Edtech Firms Gain After News of New Licenses -Breaking

by Mike Robinson

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© Reuters

By Dhirendra Tripathi

Investing.com – Stocks of U.S.-listed Chinese education companies rose Monday after The Wall Street Journal reported that China planned to issue more than a dozen licenses that would allow them to resume after-school tutoring.

Gaotu Techedu stock rose 12% (NYSE :), New Oriental Education (NYSE 🙂 surged 6.6% (NYSE :), and TAL Education was up 6% (NYSE :).

The policy will bring to an end the uncertainty that has engulfed China’s edtech sector and erased billions of dollars in their stock values since the news broke more than four months back that the companies will be asked to go non-profit.

The WSJ reports that tutoring firms including Tencent Holdings, OTC:-backed Yuanfudao discussed their requests to regulators to allow them to continue tutoring students in ninth grade or below.

The proposed licensing system will allow companies to offer after-school tutoring services on a voluntary basis. However, they are allowed to earn a profit by teaching adults to take professional exams. According to the report, there will be a price cap that companies may charge for after-school classes.

Gaotu’s value has dropped over 80% in the past six months, despite no tightening of regulations. Tal Education trades about one-tenth of what it did in June, while New Oriental trades approximately one-fifth.  

 

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