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Abu Dhabi, UAESaturday 17 November 2018

ZTE shares surge after getting clearance from US to continue doing business 

The company had languished in limbo since the US imposed the moratorium in April

ZTE shares rose climbed as much as 15% after the US formally lifted a ban on its American technology purchases. Reuters
ZTE shares rose climbed as much as 15% after the US formally lifted a ban on its American technology purchases. Reuters

ZTE climbed as much as 15 per cent after the US formally lifted a ban on its American technology purchases, allowing the Chinese telecoms gear-maker to resume business.

The company’s shares marked a month’s high in Hong Kong and rose by their 10 per cent daily limit in Shenzhen. Washington’s decision resolves a months-long moratorium that thrust ZTE into the center of a US-China trade dispute and threatened to choke off the components it needs to make its networking gear and smartphones.

The company had languished in limbo since the U.S. imposed the moratorium in April as punishment for violating Iran and North Korean export sanctions, then lying about it. In return for lifting that ban, ZTE forked over $1.4 billion in penalties, replaced its entire board and agreed to let the US appoint compliance overseers to monitor its business.

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ZTE said in a weekend post on social media service Weibo that it would “set out with full confidence” after the US decision. It estimates it could incur a loss of as much as 9 billion yuan ($1.3bn) for the first half of the year.

“This will push investors to reconsider their overly pessimistic expectations,” Wu Youwen, an analyst with Zhongtai Securities, wrote in a research note. “The communications sector had led market declines since the start of the year. It’s fully reflected concerns about shrinking capital expenditure, the ZTE issue and China-US relations.”