A chain reaction after the fall on Friday, the Education and Training shall share in the stock price, “worse”

Editor’s note: This article is from the micro-channel public number “Edu Guide” (ID: EduZhiNan), Author: Edu Guide.

On March 29, Eastern Time, the stock prices of major education and training Chinese concept stock companies were still falling.

  • Good Future Company fell by 7%, and its market value dropped from nearly 50 billion US dollars during the peak period to 31.3 billion US dollars;

  • New Oriental Company fell 3%, and its current market value is 23.6 billion U.S. dollars;

  • GSX fell 19%, with a market value of US$8.1 billion;

  • Youdao fell 8%, with a market value of US$2.9 billion;

  • Yellow Education Co., Ltd. fell 4%. It was valued at US$3 billion before going public in October 2020, and its current market value is US$1.3 billion.

Eastern time last Friday, the education and training China concept stock company has experienced a big sell-off, which is related to China’s new online education policy reporting restrictions. At present, the concept stocks in education and training are still accelerating to decline, “under internal (policy supervision) and external (US capital market)”, it can be said that k12 education and training companies have entered a “dark period” in the secondary market.

Different from the policy-related plummet last Friday, the decline of some popular companies this time is due to other reasons.

Take the biggest decline in GSX as an example. This “re-slip” is related to the “biggest supporters dumping stocks” behind them.

The biggest supporters mentioned here are hedge funds, banks, etc. They have held a portfolio of popular stocks in the past. However, nowadays, due to a number of popular stocks, they are falling. Hedge funds invested in the form of leveraged investments (due to excessive amounts) were unable to call for margin and were forced to liquidate. The follow-up caused a series of selling decisions by many parties, and the stock price “made worse.”

Multiple popular stock portfolios plummeted

A Wall Street trader mentioned: Hedge fund manager Bill Hwang’s leveraged investment liquidation triggered a plunge in Chinese concept stocks, which not only caused losses to related financing and investment banks, but may also drag down other investment institutions. Coupled with Wall Street, some investment institutions have expectations of shrinking their balance sheets, which may be the beginning of a “crisis”.

Bill Hwang

Bill Hwang, mentioned above, owns Archegos Capital Management, a private investment company. Archegos bought stocks including “ViacomCBS Inc., Discovery Inc., GSX Techedu Inc., Baidu Baidu Inc..” As the stock price rises, Archegos’s total assets are also rising: Or it has reached tens of billions, or even more than 100 billion U.S. dollars. “

However, these assets “disappeared quickly in just a few days.” Because the stock started to plummet.

The plummeting stocks caused Bill Hwang’s Archegos Capital to be asked for a margin call. As Archegos Capital was unable to add, part of the fund’s holdings were forced to liquidate. Goldman Sachs, Morgan Stanley, Nomura, Credit Suisse and other international investment banks that previously raised funds from Archegos began to sell their stocks, which eventually led to Tencent Music, iQiyi, Vipshop, GSX, Baidu and many other Chinese companies. Popular concept stocks plummeted again. According to foreign media, the total amount of the sell-off reached US$19 billion, causing the market value of related stocks to evaporate by US$33 billion, or about 215.9 billion yuan.