A strict regulatory policy was announced in China to reduce the burden of students in compulsory education, leading to huge shocks for out-of-school training institutions. Stock prices of listed companies plummeted, and market value lost hundreds of billions.

Affected by the regulation, the stock price of New Oriental Education & Technology Group Inc. (NYSE: EDU), the largest provider of private educational services in China, once plunged 70%.

New Oriental announced that in light of recent regulatory developments, it will cancel its scheduled board meeting and Q4 fiscal year 2021 earnings release, as well as the corresponding earnings announcement conference call and webcast at 8 p.m. Beijing time on Aug. 3. The company states that further updates will be provided at an appropriate time in the future.

It should be noted that the so-called "double reduction" policy has not yet been finalized, but only an "opinion on further reducing the burden of homework and off-campus training for students in compulsory education" document has been circulated.

The document reveals that tutoring institutions are not allowed to be listed for financing, and capitalization is strictly prohibited. Listed companies are not allowed to invest in educational institutions through stock market financing, and they are not allowed to purchase the assets of educational institutions by issuing shares or paying cash.

New Oriental previously responded that Chinese regulators are considering a new set of regulations, which have not yet been announced. The company has not received formal notification of such regulations.