Why TAL Education Group Stock Is Falling

BY Benzinga | ECONOMIC | 08/20/24 06:47 PM EDT

TAL Education Group (TAL) shares closed Tuesday down 5.30% at $8.58. Shares of U.S.-listed Chinese companies are trading lower after China’s central bank left its one-year and five-year loan prime rates unchanged at 3.35% and 3.85%, respectively.

Why This Matters: The decision by China’s central bank to leave the one-year and five-year loan prime rates unchanged at 3.35% and 3.85%, respectively, is significant. This move indicates a conservative approach to monetary policy, suggesting that the Chinese government may not be aggressively stimulating the economy despite a fragile recovery.

For companies like TAL Education (TAL), this can be problematic as it signals limited access to cheaper financing, which is crucial for growth, especially in a challenging economic environment.

The unchanged interest rates suggest that the Chinese government might not be providing enough stimulus to drive a significant economic recovery. This is concerning for companies across various sectors, including education, which rely on a robust economy to support consumer spending on services like tutoring and education programs.

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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 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 $6.24.

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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