ZTE VALUATIONS CUT
Chinese mutual funds adjusting stock worth by 20 to 30pc below last trading price
CHINESE funds have slashed valuations of ZTE Corp after the United States banned American companies from selling components to the telecoms equipment maker for seven years, a move ZTE said threatened its very survival.
The US action last week was sparked by ZTE’s violation of an agreement reached after it was caught illegally shipping US goods to Iran. American companies are estimated to provide 25 to 30 per cent of the components used in ZTE’s equipment.
Chinese mutual fund managers cut the value of the stock in their portfolios by 20 to 30 per cent in a spate of announcements over the weekend, a blow to ZTE that suspended trading in its mainland and Hong Kong shares last Tuesday.
About 40 Chinese mutual funds have adjusted the valuation of ZTE in their portfolios since it suspended trading. In the latest batch, five fund managers revalued the stock on Saturday.
Huatai-PineBridege and GTJA Allianz cut their valuation of ZTE’s mainland shares to 25.05 yuan (RM15.51), 20 per cent lower than its last trading price. JT Asset Management — the most pessimistic — slashed the valuation to around 30 per cent below ZTE’s last close of 31.31 yuan.
Several funds with exposure to ZTE’s Hong Kong shares, including HuaAn Fund and Harvest Fund, cut valuations to about 20 per cent below the last trading price of HK$25.60 (RM12.73).
ZTE had a market capitalisation of about US$20 billion (RM77.96 billion) before its trading suspension.
On Sunday, ZTE said it was “making active communications with relevant parties and seeking a solution to the US export denial order”.