ZTE Lost $7 Billion of Value as Lawmakers Fight Trump Deal

ZTE dived 27 percent after American lawmakers passed a bill to restore severe penalties on China’s second-largest telecoms gear-maker, according to Bloomberg.

The company has lost $7.2 billion of market capitalization in the past week, as its Hong Kong shares slid to their lowest in a year Tuesday and the Shenzhen stock plunged the 10-percent daily limit for the fourth straight day. ZTE has struggled to end a seven-year ban on American technology purchases that has crippled its business.

The selloff ensued after the U.S. Senate passed legislation that would restore penalties on the company, complicating Trump’s efforts to ease sanctions on ZTE after it pays a record fine and reshuffles management. A settlement on the issue is also deemed pivotal to tense U.S.-Chinese negotiations over trade. But the wrangling over the company produced a rare instance of Republicans allying with Democrats to defy Trump.

Reinstating a ban would cut off ZTE’s access to the chips and components it needs to build smartphones and networking equipment, essentially a death sentence. The bipartisan Senate measure, part of a defense bill, passed 85-10 and came two days before Trump was to host Republican members of Congress to discuss ways to allow ZTE to get back into business.

The Trump administration wants legislators to modify the Senate language on ZTE in the defense bill, once the House and Senate begin work to merge their versions of the legislation. Lawmakers hope to wrap up negotiations by the end of July. Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin in recent weeks have tried to persuade lawmakers of the administration’s approach to ZTE, but legislators said the deal failed to address their national-security concerns.