In­vestors wipe US$3 bil­lion off mar­ket value of China’s ZTE

The Sun (Malaysia) - - SUNBIZ -

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

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