China stock market

ZTE suppliers in collective sigh of relief as shares advance in Asia trading after US export ban is lifted

PUBLISHED : Friday, 08 June, 2018, 1:02pm
UPDATED : Friday, 08 June, 2018, 4:35pm

Shares of ZTE’s suppliers advanced across Asia after the Chinese telecom equipment maker reached a settlement with the US that will allow it to resume normal operations.

Companies from Mobi Development in Hong Kong and Eoptolink Technology in Shenzhen to Global SM Tech in South Korea and LuxNet in Taiwan all advanced after US Commerce Secretary Wilbur Ross said ZTE will pay a US$1 billion fine for breaching US sanction rules and have a US-appointed compliance team deployed in the Chinese company.

The record fine paves the way for the lifting of the sanctions imposed by the Trump administration in April that prevented ZTE from buying key components from its US suppliers for seven years.

A few weeks after the announcement of the ban, there were fears ZTE could be put out of business.

While shares of ZTE have been suspended since mid-April in Shenzhen and Hong Kong, its suppliers’ stocks were quick to applaud the settlement.

The settlement also requires ZTE to put US$400 million in escrow to cover any future violations and change its board of directors and executive team within a month.

ZTE’s chairman vows no more compliance breaches after US deal and apologises

Personnel reshuffle in the company has already been under way, with party secretary Fan Qingfeng removed from his post as executive vice-president.

Mobi Development, a maker of wireless communication antennas that derives almost half of its revenues from ZTE, jumped 4.6 per cent to HK$1.14, and Eoptolink Technology, which relies on ZTE for almost a third of sales, added 1.3 per cent to 18.24 yuan in Shenzhen.

Global SM, a South Korean maker of fasteners, gained 1.4 per cent to 1,435 won in Seoul and LuxNet added 4.2 per cent to NT$30. 70 in Taipei.