Chinese funds have slashed valuations of ZTE Corp after the United States banned American companies from selling components to the telecoms equipment maker for seven years, a move ZTE said threatened its very survival.
The logo of China’s ZTE Corp is seen on a building in Nanjing, Jiangsu province, China April 19, 2018. REUTERS/Stringer
The U.S. action last week was sparked by ZTE’s violation of an agreement reached after it was caught illegally shipping U.S. goods to Iran. American companies are estimated to provide 25-30 percent of the components used in ZTE’s equipment.
Chinese mutual fund managers cut the value of the stock in their portfolios by 20-30 percent in a spate of announcements over the weekend, a blow to ZTE that suspended trading in its mainland and Hong Kong shares on April 17.
Around 40 Chinese mutual funds have adjusted the valuation of ZTE in their portfolios since it suspended trading. In the latest batch, five fund managers revalued the stock on Saturday.