China's Kindergarten Crackdown Is the Latest Disaster for Stocks
- New kindergarten policies dim prospects for high-growth sector
- Rules on lending, gaming and drugs had already roiled markets
First came the clampdown on shadow banks. Then it was gaming companies and drugmakers. Now education firms are in the Chinese government’s crosshairs, roiling stocks and reminding investors how quickly their fortunes can change in a country rife with regulatory risk.
RYB Education Inc. and Bright Scholar Education Holdings Ltd. both plunged by records in U.S. trading, while Vtron Group Co. and China Maple Leaf Educational Systems Ltd. sank in Shenzhen and Hong Kong after the government unveiled new rules that prohibit companies from financing for-profit kindergartens via the equity market. The losses echoed declines in Chinese peer-to-peer lenders, gamemakers and pharmaceutical companies after regulators increased scrutiny of the industries this year.