ZTE | 'Overstaying', stocks resumption of A shares fell 40 percent Hong Kong stocks fell

After the micro-network news was suspended for nearly 2 months, after a formal settlement agreement was reached with the United States, ZTE’s stocks resumed trading today. Among them, A shares opened lower limit, more than 8 million singles were sold, more than 23.0 billion funds were sold in queues, and Hong Kong stocks fell directly to 40.61. %.

According to statistics, only one day today, the total value of ZTE's A shares and Hong Kong stock market evaporates by more than 16 billion yuan, which is more than 7 billion yuan more than the fine of 1.4 billion U.S. dollars (8,973 million yuan) in the settlement agreement. A share price has dropped, and the market value has fallen 107.59 billion yuan; Hong Kong stocks, if the opening price of 16 Hong Kong dollars / share price, ZTE Hong Kong stock market value fell 7.252 billion Hong Kong dollars, equivalent to 5.294 billion yuan.

Yesterday evening, ZTE Corporation issued an announcement that it had reached a new settlement agreement with the US Department of Commerce’s Bureau of Industry and Security (BIS). The company’s A shares and H shares will resume trading on the morning of June 13th.

According to the agreement, ZTE will pay a total of US$1.4 billion in civil fines, including one-time payment of US$1 billion within 60 days after the BIS issued the order of June 8, 2018, and payment within 90 days after the BIS issued the order of June 8, 2018. Until ZTE selects a U.S. bank escrow account approved by BIS and suspends an additional 400 million U.S. dollars in fines during the monitoring period (in the monitoring period, if ZTE complies with the monitoring conditions stipulated in the agreement and order of June 8, 2018, A $400 million fine will be exempted from payment upon expiration.)

It is worth noting that only after ZTE pays US$1 billion and postpones an additional US$400 million to the US bank escrow account, BIS will terminate the refusal to activate and remove ZTE from the List of Forbidden Exporters. After meeting the above conditions, BIS will announce it to the public.

ZTE Corporation paid a substantial price for the settlement of this settlement, including a fine of USD 1.4 billion. All members of the board of directors were replaced. During the 10-year observation period, the senior vice president and above leaders were all fired. Market analysis believes that in the short term, The impact of huge fines and personnel changes will affect ZTE's performance. In the long term, the ZTE event is also an opportunity, which is expected to accelerate China’s telecommunications industry’s future occupation of high technology and domestic substitution.

Citi also issued a report stating that the conditions agreed between ZTE and the U.S. Department of Commerce are harsh, and that the fines of US$1 billion and US$400 million will affect the performance of this year’s earnings. It is predicted that a huge loss will be made this year. However, ZTE held cash at the end of last year. RMB 30 billion should be sufficient to pay fines and resume the provision of U.S. spare parts.