Why TAL Education Stock Is Skyrocketing

Shares of TAL Education Group TAL surged 23.4% to $10.27 during Thursday’s session on upward momentum, benefiting from an aggressive monetary stimulus introduced by the People's Bank of China (PBoC).

What Happened: The PBoC's move included a 50-basis-point cut to the reserve requirement ratio (RRR) for commercial banks, reducing it from 10.0% to 9.5%. This cut, combined with reductions in both the seven-day repo rate and the 14-day reverse repo rate, is expected to inject around 1 trillion yuan ($140 billion) into the banking system.

With additional liquidity available, banks will have more capacity to lend, which could lead to increased access to funding for both businesses and consumers in China. TAL Education stands to benefit directly from this influx of capital into the economy, particularly as it navigates a challenging regulatory environment in the wake of recent education reforms.

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The Chinese education sector has been under pressure since the government introduced a series of regulatory measures in 2021 aimed at reducing the burden of after-school tutoring on students. These measures severely impacted private education companies like TAL, forcing many to pivot their business models.

However, with the recent monetary easing, there is optimism that consumer confidence and spending will recover, potentially driving demand for education services, particularly in regions where TAL has a significant presence.

What Else: In addition to the liquidity boost, the PBoC also lowered mortgage rates by 0.5 percentage points, providing relief to China's struggling property market. Stabilizing the real estate sector is critical for restoring consumer confidence, as the property market plays a central role in China's economy.

A healthier housing market could lead to a broader recovery in consumer spending, which may translate to increased investments in children’s education — a key factor that could bolster TAL Education's business as families feel more financially secure.

TAL Education has been working to diversify its offerings, expanding into online education and other digital initiatives to offset the challenges from regulatory crackdowns.

As China's economy begins to stabilize, the company is well-positioned to take advantage of the improved economic conditions and a potential uptick in household spending on educational services.

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How To Buy TAL Stock

Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.

For example, in TAL Education’s case, it is in the Consumer Discretionary sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.

According to data from Benzinga Pro, TAL has a 52-week high of $15.52 and a 52-week low of $7.34.