(Bloomberg) -- China's support for vocational schools is breathing life into education stocks that have been battered by a crackdown on private tutoring businesses.
Stocks ranging from training service providers to education consulting firms all soared in reaction to the government's release of guidelines to promote vocational education. Jiangsu Chuanzhiboke Education Technology Co. rose the 10% limit in Shenzhen, while Kaiyuan Education Technology Group Co. jumped 20% in Shanghai.
China has been pushing for the expansion of skill-focused education for years as it seeks to upgrade its manufacturing sector and reduce dependence on other nations for key technologies. College-level vocational courses will account for at least 10% of higher education admissions by 2025, with a priority on high-tech industries, the government said.
Citigroup analysts including Mark Li expect the move to trigger a re-rating of vocational and higher-education shares that have been weighed by the clampdown on after-school tutoring since July. The regulations, including a ban on firms making a profit from teaching school subjects, have driven companies out of business and led to lay-offs.
Citigroup prefers Hong Kong-listed China East Education Holdings Ltd., China Yuhua Education Corp, and Hope Education Group Co.. China International Capital Corporation expects New Oriental Education & Technology Group Inc., which has lost two-thirds of its market value since the curbs, to also benefit.
Trading in Hong Kong stocks was canceled on Wednesday because of typhoon Kompasu.
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With assistance from Bloomberg
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