Shares in Chinese tutoring firms tumbled today after Beijing imposed new rules on companies to register as non-profit organisations.
The move effectively wiped out business models in the multibillion-dollar sector and hammering their owners' fortunes.
Officials announced on Saturday they will stop approving new after-school education institutions, while all existing ones must now register as non-profits, saying the industry has been "hijacked by capital".
The private education sector was worth $260 billion in 2018 according to consultancy and research firm LEK Consulting, driven by China's hyper-competitive kindergarten-to-university education system in oversubscribed cities.
While the move - which also bans teaching on weekends and during holidays - is aimed at reducing pressure on children, parents and teachers, it is a gut punch to the tutoring industry, which was reflected in today's trading.
Shares in New Oriental Education & Technology Group plunged 47% in Hong Kong, deepening Friday's record 41% fall that came as speculation about a crackdown spread on social media.
Its US-traded shares shed 54%.
The company said in a statement on Sunday that it expected the new measures "to have a material adverse impact on its after-school tutoring services related to academic subjects in China's compulsory education system".
Another firm, Koolearn Technology Holding Ltd sank by 33% while China Maple Leaf Educational Systems fell 10%.
Businessmen lost their billionaire statuses as shares were hammered.
Larry Chen, the founder of Gaotu Techedu, lost his status as a billionaire and is now worth around $336m after his firm shed about two-thirds of its value in New York.
The former teacher has lost about $15 billion since January, having also been caught up in the collapse of Archegos Capital Management.
New Oriental CEO Yu Minhong also lost his billionaire status, shedding $685m to leave him with $579m.
And Zhang Bangxin's fortune fell $2.5 billion to $1.4 billion, Bloomberg News reported, after his New York-listed TAL Education Group fell 71%.
Analysts say the fallout from the new rules could jeopardise listings.
The crackdown resembles authorities' moves to rein in China's tech giants, taking aim at monopolistic behaviour and imposing huge fines against firms.
On Saturday, the market regulator said Tencent had violated competition laws, compelling it to relinquish its exclusive music label rights and prompting the company's shares to fall more than 7% today.
China's for-profit tutoring sector has faced heightened scrutiny in recent years, with excessive workloads and prohibitive costs of a "good" education coming under the spotlight.
The cost of education has also been cited by many young Chinese as a reason they are unwilling to have more children, even after China formally allowed all couples to have three children this year in an effort to stave off population decline.
