Chinese education and tech stocks have lost $1T+ since February. Why?

Apparently, stock *can* go down (Source: Getty Images)

Things are very unchill when it comes to Chinese tutoring stocks right now. Here’s what’s going on. 

Backstory: In an effort to reverse China’s declining birthrate, the country has been finding ways to reduce the cost of starting and raising a family. 

One money-suck is the $120B private tutoring industry. Per the most recent data from the Chinese Society of Education, 75%+ of students 6 to 18 are privately tutored to prep for exams.

Well, they were. Over the weekend, China announced a ban on for-profit tutoring in core subjects. The policy also: 

• Restricts foreign investments in the industry
• Requires any private companies that still teach core subjects to become nonprofits
• Prevents core-subject tutoring on vacations or weekends 

Shareholders started dumping their tutoring stocks last week

TAL Education, Koolearn Technology Holding, and several other firms have seen their shares plummet like never before.

So, what’s next? One analyst tells Bloomberg that tutoring companies should pivot ASAP, adding “there is potentially an abundance of follow-up policies.”

It’s not just education 

More broadly, China is cracking down on consumer-facing tech including Alibaba (ecommerce), Tencent (social), and Didi (ride-sharing). 

One potential reason: The country wants to refocus the economy to export goods. 

Either way, Chinese tech and education stocks have lost a whopping $1T in value since February.