(Bloomberg) — Trading in Chinese education stocks listed in the U.S. showed signs of a slight reprieve on Tuesday after a sharp two-day selloff wiped out billions in market value from the companies.
Shares of TAL Education Group and New Oriental Education & Technology Group — down nearly $20 billion in value in the past two trading sessions — each gained more than 1%. Other companies, including Meten EdtechX Education Group Ltd. and 17 Education & Technology Group Inc. were also higher as of 11:40 a.m. in New York. Still, the recovery was short-lived for others, with shares of firms like Gaotu Techedu Inc. and China Online Education Group erasing gains seen earlier in the morning.
The rebound follows the worst two-day selloff in U.S.-listed companies in over a decade as regulators in Beijing unleashed sweeping policy changes on the technology, online education and property management sectors. Market across China slumped on Tuesday as rumors circulated that U.S. funds were dumping Chinese and Hong Kong assets, with analysts warning that gains may be short-lived.
“I think it’s kinda of a dead cat bounce,” said Matt Maley, chief market strategist for Miller Tabak + Co. “It’s way too early to be catching the falling knife,” he added.
Despite the rebound in some education names, not everyone’s convinced the selling pressure on Chinese shares has abated.
“I expect the selloff in listed mainland companies in Hong Kong and the U.S. to continue for some time yet until we reach a level that international investors feel the now much-increased China regulatory risk is balanced by attractive enough valuations,”said Jeffrey Halley, senior market analyst at Oanda.
The Nasdaq Golden Dragon China Index — which tracks 98 of China’s biggest firms listed in the U.S. — fell for a fourth straight day bringing its losses since a record high in February to nearly 50%. Stocks on the gauge have combined to lose more than $858 billion in value over that five month stretch. Tech-giants including Alibaba Group Holding Ltd., JD.com Inc., NIO Inc. and Baidu Inc. were among the biggest decliners, all declining by at least 4%.
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