Courtesy of Zero Hedge
Almost two months since ZTE was halted on news that the US government had dealt the firm a "death sentence" banning the tech giant from buying US parts (due to breaking Iran sanctions – and spying allegations), the telecoms company has resumed trading in Hong Kong – down 37.5% at the open…
The White Houseannounced the initial banon ZTE buying parts from US firms in April, after the company was found to have violated a settlement originally imposed over ZTE's sales to Iran in defiance of US sanctions. As part of the original settlement, ZTE had agreed to fire certain senior managers and withhold bonuses from others. But the company didn't follow through with either promise.
Then last Thursday shortly after Commerce Secretary Wilbur Ross announced the administration had worked out a deal to save ZTE which meant the company would pay a penalty of $1.3 billion (plus place another $400 million in escrow to be seized should the company again fail to hold up its end of the bargain). The company would also be forced to accept – and pay for – a team of compliance officers that will be led by a "special independent compliance coordinator" who will report jointly to ZTE's CEO, its board and the Commerce Department. The company will be forced to pay for the monitors for ten years. The company will also be required replace its entire board of directors and senior leadership team. In exchange, ZTE will resume buying products from US firms.
And today the share start trading again…
Furthermore, in Shenzhen, ZTE is limit-down 10% (China's post-crisis rules) - halted for the rest of the day.
However, as we detailed earlier, we wouldn't be holding our breath as a group of senators have successfully attached an amendment that would effectively kill the Trump administration's deal with Chinese telecoms firm ZTE to a "must-pass" defense authorization bill, according to Axios - the latest sign that the movement to kill the deal is gaining momentum, even among Republicans who rarely oppose the president… and would reimpose the White House's original ban on ZTE buying components from US firms (what some have described as a "death sentence" for the company).