Broken English

If you strain your ears, you should be able to hear the collective relieved sigh of a million Shanghai students. Final exams will now be English-free. Endless hours saved in audio practice alone, listening to Colin Firth and Prunella Scales discuss what time the library is closing.

The trend is expected to sweep the nation.But oh no, what a double whammy for Chinese education stocks, coming in the wake of the "non-profit test centers only" body slam. What will honest investors do for outsized returns relative to risk?

Look online for help, naturally. Chinese parents are figuring out that English apps are a great alternative to spending your Saturday schlepping the kid to sing "Old McDonald" with a Ukrainian disguised as an Oxford grad for RMB 150 an hour. The covid factor has added a booster rocket to China's already frothy online education industry, which grew from RMB380b in 2020, to 460b in 2021, pegged for 540b next year.

"English attainment will remain essential for education at all levels," says Edward Lehman. "Now that the Cambridge curriculum paradigm is losing importance, there's an opportunity for more up-to-date offerings that can be delivered online. Better yet, this is not a sector for giants only. We're seeing plenty of software companies launch English apps and scale well without endless advertising costs."