ZTE stock plummets 40% after crippling U.S. ban

ZTE stock plummets 40% after crippling U.S. ban

ZTE, the fourth largest smartphone vendor in the USA, has been in the news nearly daily since the Commerce Department lifted a stay it placed on a US export ban against the firm.

Shares in ZTE Corp. fell 42 percent Tuesday in Hong Kong on their first trading day after the Chinese telecoms equipment maker agreed to pay a $1 billion USA penalty to the U.S. government and replace its top managers.

The amendment will also ban government agencies from trading telecommunications equipment and services with Chinese telecom companies ZTE and Huawei, as well as from providing loans to or subsidizing either company, according to The Hill.

The benchmark Shanghai Composite Index gave up 0.97 per cent, or 30.00 points, to 3,049.80 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.58 per cent, or 27.73 points, to 1,731.43.

All members of ZTE's leadership at or above the senior vice president level also must be terminated, along with any executive or officer tied to the wrongdoing. In April, the White House announced a seven-year ban on the company buying US parts after it said the company violated USA sanctions on trade with Tehran and Pyongyang.

The U.S. Commerce Department can exercise discretion in granting exceptions.

Per Trump's deal, ZTE will pay $1 billion in fines and put $400 million in escrow, as well as overhaul its board of directors.

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Ross was planning to brief senators on the ZTE deal Monday, Senate Majority Whip John Cornyn said. "The new governance structure will pose challenges for the company's management in the future", Zhongtai Securities said in a note.

Hong Kong's benchmark Hang Seng index was down 0.6 per cent by the midday break.

The ban forced ZTE to suspend major operations, and trading in its shares in were halted on 17 April.

The decision to lift the USA ban on ZTE has faced sharp criticism from United States politicians, including from some Republicans.

The case has become highly politicized and a key focus of bargaining talks as Washington and Beijing look to avert a trade war.

ZTE, with a market value of about $20-billion before its shares were suspended in April, is the world's No. 4 telecom equipment maker after Huawei Technologies, Ericsson and Nokia. Tom Cotton, R-Ark., Chris Van Hollen, D-Md., and Chuck Schumer, D-N.Y., added language to the National Defense Authorization Act to reinstate a ban on ZTE buying USA components.

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