Investors wipe US$3 billion off market value of China’s ZTE
HONG KONG: Chinese telecommunications giant ZTE Corp had about US$3 billion (RM11.9 billion) wiped off its market value as it resumed trade yesterday after agreeing to pay up to US$1.4 billion in penalties to the US government.
China’s No. 2 telecommunications equipment maker was crippled when a seven- year supplier ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally trading with Iran and North Korea.
The ban, which has prevented ZTE from buying the US components it relies on to make smartphones and other devices, will not be lifted until ZTE pays a fine and places US$400 million more in an escrow account in a US-approved bank.
The Hong Kong-listed shares of ZTE slid as much as 41% to HK$14.98 (RM7.62), their lowest in a year, following a two-month trading suspension, while its Shenzhen shares fell by their 10% limit after it confirmed details of the agreement.
Hong Kong’s Hang Seng Index closed down 1.2%, while the China Enterprises Index ended down 1.4%.
During its trading halt, fund managers cut their valuations of ZTE shares, with some lowering valuations of its A-shares to 20.04 yuan per share, or a 36% discount to the closing level on April 16. – Reuters