ZTE plummets after U.S. Senate puts Trump reprieve in doubt
* HK shares slide 24 pct, Shenzhen stock falls 10 pct
* US Senate's vote sets up potential battle with Trump
* Measure reignites uncertainty over ZTE supply chain
(Updates ZTE share price, adds details)
By Anne Marie Roantree and Sijia Jiang
HONG KONG, June 19 (Reuters) - Shares of ZTE Corp
plunged on Tuesday after the U.S. Senate's passage
of a defense bill set up a potential battle with the White House
over whether the Chinese telecoms firm can resume business with
its U.S. suppliers.
This year, the Senate included an amendment that could kill
the Trump administration's agreement to allow ZTE to resume
business with U.S. suppliers, one of the few times the
Republican-led Senate has veered from White House policy.
ZTE's Hong Kong-listed shares tumbled as much as 24 percent
to HK$10.02, its lowest in nearly two years, while its Shenzhen
shares fell by their daily limit of 10 percent. Since trading
resumed last week, the stock has lost 38 percent or more than $7
billion in market value.
The Senate voted 85-10 for the annual National Defense
Authorization Act, throwing the state-backed company back into
the centre of a bilateral trade spat and reigniting uncertainty
over the outlook for its crucial supply chain.
But before it can become law, the bill must be reconciled
with one already passed by the House of Representatives that
does not include the amendment. Any compromise measure must then
be passed by both chambers and signed into law by Trump.
ZTE was hit in April with a seven-year ban barring U.S.
suppliers selling to it after it broke an agreement to
discipline executives who conspired to evade U.S. sanctions on
Iran and North Korea.
At Trump's urging, ZTE and the U.S. Commerce Department
reached an agreement on June 7 to have the ban lifted. According
to the agreement, the ban would only be lifted after ZTE pays a
$1 billion fine and puts another $400 million in escrow in a
U.S. approved bank for 10 years.
Last Wednesday, ZTE proposed a $10.7 billion financing plan
and nominated eight board members as it seeks to rebuild its
(Reporting by Anne Marie Roantree, Sijia Jiang and Donny Kwok;
Editing by Edwina Gibbs)
First Published: 2018-06-19 03:51:49
Updated 2018-06-19 05:08:27
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