ZTE Loses US$7bn From Trade Ban
ZTE has lost more than US$7bn overnight with stocks diving 27 per cent after the US senate passed a bill reinstating its seven-year trade ban.
The US senate voted 85-10 for the must-pass defense bill on Monday overturning President Donald Trump’s decision to lift the sanctions.
The company’s Hong Kong shares plunged to its lowest in a year with the Shenzhen stock dropping the 10 per cent daily limit for the fourth day in a row.
ZTE claims this trade ban on the company has already caused losses of up to US$3.1bn from ‘clients pulling out and costs piling up’.
President Trump negotiated for the Chinese company to pay US$1.4bn in fines, have US officials monitor the company for the next decade and to replace the entire board of directors and senior leadership.
Bloomberg reports a settlement over this issue is vital to US and Chinese negotiations over trade.
The trade ban imposed on ZTE sees it unable to buy American components for its smartphones such as chips from Qualcomm.
Documents filed in Texas earlier this month claims the Chinese company was a ‘front for military intelligence’ and used cash bribes to score deals in African countries.
Australia has also made moves impacting ZTE with Telstra removing the Chinese company as its supplier for its home brand phones.