(Bloomberg) -- Stocks in China and Hong Kong rebounded Thursday after authorities intensified efforts to calm market fears about Beijing’s crackdown on the private education industry.
The early gains came after the nation’s securities regulator convened a video conference with executives of major investment banks Wednesday night, which was said to have conveyed the message that education policies were targeted and not intended to hurt companies in other industries.
The benchmark CSI 300 Index jumped 1.4% in early trade, led by health care and consumer stocks. Hong Kong’s Hang Seng Index rose 2%, amid gains in property and technology companies that had borne the brunt of recent selling. Education firms, some of which are moving swiftly to overhaul their business to adjust to new regulations, also rose. New Oriental Education & Technology Group Inc. added 9.7% while Koolearn Technology Holding Ltd. gained 7%.
Wednesday’s hastily arranged meeting was the latest sign of Beijing’s discomfort with a selloff that sent the nation’s key stock indexes to the brink of a bear market. State-run media have published a series of articles suggesting the rout is overdone, while some analysts have speculated government-linked funds have begun intervening to support the market.
A front page editorial on Thursday by the Economic Daily reinforced the message that recent policies on tech and tutoring sectors were not aimed at restricting or suppressing the development of certain industries, while state-run Xinhua said China’s strengthening economy provided a guarantee and foundation for capital market development.
Thursday’s move higher follows a rebound in Chinese stocks listed in the U.S. The Nasdaq Golden Dragon Index closed 9.3% higher Wednesday, bouncing back after a three-day plunge that erased nearly $800 billion of Chinese equity value. Losses had spilled over into everything from the yuan to the S&P 500 Index and U.S. Treasuries during one of its most extreme phases on Tuesday.
The steep declines were triggered by China’s shock decision to ban swathes of its booming tutoring industry from making profits, raising foreign capital and going public. It was the government’s most extreme step yet to rein in companies it blames for exacerbating inequality, increasing financial risk and challenging the Communist Party’s grip on key segments of the economy.
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