Developing | ZTE shares plunge in Hong Kong and Shenzhen after firm agrees to pay US$1.4 billion fine
ZTE tumbles 42 per cent in Hong Kong while its Shenzhen-traded stock tumbled by the 10 per cent daily limit, with Citic Securities predicting another 28 per cent drop in the mainland-listed shares
Shares of ZTE tumbled in Hong Kong and Shenzhen trading on Wednesday after the Chinese telecom equipment maker agreed to pay a combined US$1.4 billion in fines, as well as make changes in senior leadership and replace its board of directors, as part of a deal to lift US sanctions.
The stock plunged 42 per cent to HK$14.96 in Hong Kong at the close, after being suspended for nearly two months. Trading volumes also surged, with the number of shares that changed hands jumping to about 15 times its 180-day average based on Bloomberg data.
Its Shenzhen-traded stock slumped by the 10 per cent daily cap to 28.18 yuan. Less than 0.1 per cent of ZTE’s shares available for public trading changed hands for the day, indicating that the sell-off is likely to continue.
While ZTE’s Hong Kong-listed shares may have already fallen to a reasonable level in the one-off shake-out, its mainland-traded stocks will probably drop by another 28 per cent before the slump ends, according to Citi Securities. The sanction is likely to lower its future profit by 50.3 billion yuan (US$7.85 billion) in coming years, the brokerage said.
Investors agreed.
