(Yicai Global) July 26 -- Shares in New Oriental Education and Technology Group, TAL Education Group and a host of other Chinese online tutoring firms have all more than halved since Friday after the Chinese government announced that it will block e-educators from offering classes outside of school hours to help reduce the burden on the country’s school kids and it will restrict their access to funds.

New Oriental’s share price [NYSE:EDU] crashed 54.22 percent to close at USD2.93 at the close of markets on July 23. Its Hong Kong-listed stock [HKG:9901] was trading down 43.38 percent at 3:30 p.m. China time at HKD17.10 (USD2.20). Gaotu Techedu [NYSE:GOTU] plummeted 63.26 percent to finish at USD3.52 on July 23. TAL Education Group [NYSE:TAL] tanked 70.76 percent to close at USD6.

E-educators are not allowed to offer courses after school hours, on public holidays, weekends and during the holidays, regulators said in a set of guidelines issued on July 24. Online educators should register as non-profit organizations, they added.

Companies that are listed on the mainland’s stock markets are not allowed to buy shares in e-educators nor buy their assets through other means, the authorities added as they try to cap unbridled growth in the country’s online tutoring sector which has exploded in the wake of the Covid-19 pandemic last year.

New Oriental, Doushen Beijing Education and Technology, Xueda Xiamen Education Technology Group and Longwen Education, which offer extra-curricular kindergarden to year 12 classes, all issued statements saying that the new rules, once they come into effect, will have a huge adverse effect on their profitability.

Zhejiang Huamei Holding and Suzhou Kingswood Education Technology both said that the proportion of extra-curricular training they offer is small.

Offcn Education Technology, which mainly provides vocational training for adults, said that the guidelines will have no material impact on the company’s main business. Shanghai Xinnanyang Only Education & Technology will branch into vocational education, it said.

Editor: Kim Taylor