China education firms sink as Beijing tightens grip

China Maple Leaf Educational Systems

16/11/2018 05:54

SHANGHAI, Nov 16 (Reuters) - Chinese private education
stocks sank on Friday after Beijing moved to tighten the reins
on the early education sector, citing child safety issues that
have hit some firms over the last year and saying that others
were making too much profit.
    China's State Council said on Thursday it would not allow
private kindergartens to go public as individual entities or as
part of asset packages and that blocked listed firms from buying
private kindergartens via share sales or by cash.  urn:newsml:reuters.com:*:nH9N1XO00F
    U.S.-listed RYB Education Inc  RYB.N , which was hit by a
child abuse scandal in China last year, dropped over 50 percent
overnight, wiping off $200 million from its market valuation. In
Hong Kong and Shenzhen peers dropped sharply on Friday.
 urn:newsml:reuters.com:*:nL4N1XR1BJ
    The move by Beijing is the latest regulatory crackdown to
rattle investors, following its moves to rein in sectors from
online lending to gaming.
    In a draft document laying out the plans, China's cabinet
said it would look to standardise pre-education, bolster
"lagging" teaching standards and look to curb excessive
profit-seeking.
    "Some kindergartens are overly profitable and some child
safety issues have occurred," the state council said.
    "This relates to the healthy development of millions of
children, social harmony and stability and the future of the
Party and the state."
    The RYB case last year, involving allegations of child
abuse, had sparked widespread anger in China about the lack of
trained teachers, low wages and poor regulatory oversight in the
massive and fast-growing private pre-school sector.

 (Reporting by Adam Jourdan; Editing by Stephen Coates)
 ((adam.jourdan@thomsonreuters.com; +86 21 6104 1778; Reuters
Messaging: adam.jourdan.thomsonreuters.com@reuters.net))