ZTE shares surge 22% as US sanctions lift moves step closer

July 12, 2018
ZTE had been forced to halt operations and was on the verge of collapse after Washington announced a seven-year ban on US companies selling it crucial parts

Shares in Chinese telecoms equipment maker ZTE surged more than 20 percent in Hong Kong on Thursday after the company moved a step closer to having a painful US purchase ban lifted.

The firm had been forced to halt operations and was on the verge of collapse after Washington announced a seven-year ban on US companies selling it crucial parts owing to its handling of a sanctions violation.

However, as a favour to Chinese President Xi Jinping, US President Donald Trump ordered the Commerce Department to ease the penalties and replace it with an order to pay a $1 billion fine and put $400 million in an escrow account to cover any future penalties for violations.

It was also ordered to replace its board of directors and retain outside monitors.

On Wednesday ZTE signed an escrow agreement, meaning the sanctions could be lifted as soon as Thursday.

The news sent shares in the firm soaring 22.08 percent in Hong Kong to HK$13.60 by the break. Still, it is sharply down from the HK$25.60 it was at before trading was suspended after the sanctions were announced in April.

ZTE was pushed to the brink by the initial , which came after US officials said it had failed to take action against staff who were responsible for violating against Iran and North Korea. It was fined $1.2 billion last year for those violations.

Trump's decision to step in was seen as an olive branch by the as trade war tensions started to mount, making it a key element in the spat between Washington and Beijing.

However, despite the agreement US lawmakers are working to reinstate the ban, accusing Trump rewarding a that has repeatedly broken US law and engaged in espionage.

Explore further: ZTE shares set to resume trading after US reprieve

Related Stories

US lets ZTE resume some activity

July 4, 2018

The United States has temporarily allowed Chinese telecoms company ZTE to resume some activities while it works to meet conditions set by Washington in a politically charged settlement reached last month.

US, China near deal to save ZTE: report

May 22, 2018

The United States and China have a tentative deal to save embattled Chinese telecom company ZTE, days after the two nations announced a truce in their trade standoff, The Wall Street Journal reported Tuesday.

Recommended for you

Team breaks world record for fast, accurate AI training

November 7, 2018

Researchers at Hong Kong Baptist University (HKBU) have partnered with a team from Tencent Machine Learning to create a new technique for training artificial intelligence (AI) machines faster than ever before while maintaining ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.