Chinese Firm ZTE's Stock Shoots Up After US Lifts Ban

Chinese telecommunications giant ZTE got good news over the weekend when the U.S. Commerce Department removed its ban on companies selling parts to the embattled firm. The months-long ban financially damaged ZTE, but once the ban was lifted, the company’s stock price surged on Monday.

By the early afternoon, ZTE’s stock price in Hong Kong had risen by 17 percent. However, even at $16.12 per share (in Hong Kong dollars), ZTE’s stock price is still 37 percent lower than where it was before the ban, according to Reuters.

ZTE recorded a net loss of around $1.35 billion for the first half of the year due to the ban.

The large telecom firm had to suspend operations in the U.S. in April after pleading guilty to illegally doing business with Iran and North Korea. Despite his usual hostile stance towards Chinese businesses in the U.S. in recent months, President Donald Trump committed to helping ZTE get back on its feet in the country.

ZTE had to pay around $1.7 billion to get back in the U.S. government’s good graces, according to CNET. The Chinese firm reportedly told its clients it would get production up and running again as quickly as it could over the weekend. There have been concerns over the firm’s potential to cause national security problems.

One of the other major punishments ZTE will endure is that its leaders at or above the rank of senior vice president will be expelled from the company. ZTE agreed to do this as part of the settlement to lift the U.S. ban.

The U.S. and China have been engaged in an escalating trade war for the past several months. It has mostly manifested in billions of dollars worth of tariffs being introduced on both sides of the conflict. The Trump administration’s goal is to punish China for alleged intellectual property theft, specifically related to the technology market.

ZTE produces everything from mobile devices to routers and software. The Shenzhen-based technology firm was founded in 1985.