Last week US Commerce Department lifted the ban on American firms selling parts to ZTE after the Chinese company deposited $400 million to close the deal with a settlement. This escrow amount will stay for as long as 10 years to provide the US government access to the money if ZTE violates the June settlement. The settlement also included a billion dollars paid as a penalty to the US. ZTE also had to agree upon removing the majority of its leadership at or above the position of Senior Vice-President associated to the wrongdoing within 30 days.
But ZTE has bounced back as its shares soared 10%. ZTE’s Hong Kong-listed stock opened at 5.5% which was 17% by noon last Monday. Although this was still 37% lower than its last listed price in April following which trading was suspended because of the ban.
Earlier President Trump had tweeted that he shut down ZTE and now let it reopen as a special gesture for the Chinese President Xi Jinping. ZTE relies heavily on the U.S for components for its mobile phones and networking gear. ZTE had to cease operations after the ban was levied in April. The ban caused a massive setback to ZTE’s shares as the market valuation of the company dropped by almost $11 billion.