Tuesday, 19 June 2018

ZTE's shares plummet as the company begins its long, hard road to recovery

By Chris Kelly, Total Telecom
Wednesday 13 June 18

ZTE's share price fell dramatically on both the Hong Kong and Shenzhen Stock Exchange's and is expected to fall further in the coming days

ZTE's shares lost 39 per cent of their value on the Hong Kong Stock Exchange last night, following an agreement between ZTE and the US that will see the Chinese kit maker pay a $1…

ZTE's shares lost 39 per cent of their value on the Hong Kong Stock Exchange last night, following an agreement between ZTE and the US that will see the Chinese kit maker pay a $1.4 billion fine.

The deal has brought ZTE back from the brink of extinction, but the market's reaction to news of the fine ZTE must pay indicates that it will be a long, hard road to recovery for the world's fourth largest smartphone manufacturer.  

After being suspended for nearly two months, the company's share price fell to HK$15.66 ($1.99) per share on the Hong Kong Stock Exchange, illustrating just how much of a torrid time the company has endured over recent weeks.  

In Shenzhen, the company's stock fell by 10 per cent (the maximum permitted daily devaluation) to 28.18 Yuan ($4.39). Analysts expect further drops in ZTE's mainland share price in the coming days.  

Despite the dramatic impact on its share price, ZTE seems well positioned to bounce back over the mid to long term. With the US banning order overturned, the company is now able to source the US produced chipsets that are at the heart of a number of its most successful smartphones.   

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