RYB, Bright Scholar slide on new Chinese stock policy for private kindergartens

Shares of RYB Education (RYB) and Bright Scholar Education (BEDU) are under pressure following news reports saying that China will not allow private kindergartens to sell shares to the public either by themselves or as part of asset packages. PRIVATE KINDERGARTENS BARRED FROM SELLING STOCK: Amid public outcries over several cases of child abuse at private kindergartens across the country, China said it will not allow private kindergartens to sell shares to the public either by themselves of as part of asset packages, according to Caixin Global's CX Live, citing a policy document. Listed companies are not allowed to invest in private kindergartens through share sales or cash injections under the new policy, the report added, and private investors will be barred from backing public kindergartens. The restrictions are said to be part of a broader preschool education reform. In a statement following the news, RYB said that, "On November 15, Xinhua News Agency was authorized to issue the "Opinions on the Deepening Reform and Standardization of Preschool Education" by the Central Committee of the Communist Party of China and the State Council. Red, Yellow and Blue have always responded positively to the call of the competent authorities at all levels, actively cooperated with the government to explore the model of multi-level parks, and strive to contribute to the healthy development of pre-school and private education. The promulgation of the "Opinions" is the specific requirements of the central government for the standardized management of preschool education. It continues the original idea of preschool education management and is a consistent concept. Red, Yellow and Blue fully support the promulgation and implementation of the Central Committee's "Several Opinions on Deepening the Reform and Standardization of Preschool Education," and firmly believe that China's preschool education in the transformation will surely have a healthier and sustainable future. We will seriously study the policy orientation, always adhere to the policy calls of the party and the state, and strive to do a good job of preschool education that the people are satisfied with. PRICE ACTION: In afternoon trading, shares of RYB have plunged 55% to $7.49, while Bright Scholar's stock has slipped 17.7% to $10.52.