Senate adopts measure blocking Trump ZTE deal

Shares in Chinese tech company ZTE are set to resume trading in Hong Kong on Wednesday after the company reached a deal with the US government to lift a crippling ban on the supply of crucial parts

Senate adopts measure blocking Trump ZTE deal

Among other things, it would restore penalties on ZTE for violating US export controls and bar USA government agencies from purchasing or leasing equipment or services from the Chinese company.

A bipartisan amendment was added to the National Defense Authorization Act that reinstitutes penalties against ZTE for violating USA sanctions against exporting to Iran and North Korea, and bans US government agencies from purchasing any of the company's devices or services.

The U.S. Senate plans to advance legislation to restore penalties on ZTE Corp., after President Donald Trump drew sharp criticism for easing restrictions to get the Chinese company back in business.

But the ban on buying USA parts, imposed by the department in April, will not be lifted until ZTE pays fines and places $400 million more in an escrow account in a US -approved bank.

Commerce Secretary Wilbur Ross told CNBC at the time that ZTE would replace its management team and board and embed a new department for compliance with the U.S.

Acacia said the settlement may ultimately allow it to resume ties with ZTE.

ZTE (ztcoy), a focal point of a U.S. Cotton said the president won't veto the bill "because the bill pertains many other critical priorities". "The new governance structure will pose challenges for the company's management in the future", Zhongtai Securities said in a note. On Wednesday in Hong Kong, they nosedived 40% to their lowest level in more than a year.

During its trading halt, fund managers cut their valuations of ZTE shares, with some lowering valuations of its A-shares to 20.04 yuan per share, or a 36 per cent discount to the closing level on April 16. Its Shenzhen stock slid by the daily maximum of 10%.

There is also a risk that the Trump administration's move to lift the ban on ZTE could be undercut by Congress.

On Tuesday, senators on both sides of the aisle spoke out against Trump's deal, which is believed to have been made to soften a potential trade war in China, following the announcement of steel and aluminium tariffs on the country's exports.

USA lawmakers have attacked the agreement and planned legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.

ZTE, with a market value of about $20-billion before its shares were suspended in April, is the world's No. 4 telecom equipment maker after Huawei Technologies, Ericsson and Nokia.

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