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The Communist Party Just Wiped Out a Whole Industry in China; Next Target, Chinese Companies Spilling Secrets in IPOs on the New York Stock Exchange

Courtesy of Pam Martens

Share Price Collapse in Chinese Stocks Listed on the NYSE

By Pam Martens and Russ Martens: July 27, 2021 ~

It’s going to be very hard for Americans to get their brains around what is happening in China. The Chinese Communist Party (CCP) decided to wipe out an entire industry – notwithstanding the fact that tens of billions of dollars were already invested in that industry’s publicly-traded companies, many of which were listed on the New York Stock Exchange. The industry is the private education market in China. A sampling of the carnage is reflected in the chart above. Shares of New Oriental Education & Technology (EDU), TAL Education (TAL), and Gaotu Techedu (GOTU), all listed on the New York Stock Exchange, have lost nearly all of their market value since April.

Regulations issued over the weekend by China’s Ministry of Education now bar these private tutoring and online education platforms from making profits, from capital raising, and from being listed on stock exchanges. The CCP, in other words, does not want any competition when it comes to “educating” its people. The CCP has spun this as a kindly gesture, emphasizing that it doesn’t want the young people in China being stressed with weekend and holiday tutoring by private companies.

The fact that China waited to come to this decision until after these companies were already listed on the New York Stock Exchange and had billions of dollars of foreign capital invested in them, suggests that China has decided to throw a wrench into the ability of Chinese companies going public via Initial Public Offerings (IPOs) on the New York Stock Exchange or Nasdaq stock markets in the U.S.

This latest corporate crackdown by China got underway in October when Jack Ma, the billionaire co-founder of Alibaba, the online shopping giant, ridiculed Chinese regulators for chocking off innovation. The CCP responded swiftly, killing Ma’s plans for a share offering of the financial-technology company, Ant Group. Then in April, China hit Alibaba with a record fine of $2.8 billion for monopolistic actions.



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