ZTE shares ended higher Monday, in the first day of trading since the US has lifted the order on the Chinese tech firm doing business with US companies.
However, analysts warned that ZTE still had a lot of work to do to secure its future – including finding new potential suppliers to reduce its reliance on US tech firms.
ZTE shares ended the Monday Asian trading session 10% higher at CNY15.51 on the Chinese stock market. Turning to the Hong Kong listed ZTE stock, the share price surged 16.45% to HKD16.
US lifts ZTE ban
Following intervention from US President Donald Trump, the US has lifted the ban on China’s ZTE Corp from doing business with US suppliers that are vital to the operations of the Chinese firm.
Instead of being denied access to US tech firms that supply the Chinese telecoms company with many of its essential parts, ZTE Corp will now be fined instead.
During June ZTE paid an almost $1 billion fine to the US and has also placed some $400 million in a holding account to ensure the funds are available to pay any future fines it incurs. ZTE is also required to change the way it operates in some areas to comply with US rules and regulations.
“While we lifted the ban on ZTE, the Department will remain vigilant as we closely monitor ZTE's actions to ensure compliance with all US laws and regulations,” US Commerce Secretary Wilbur Ross said.
More work ahead for ZTE
While ZTE stock holders are clearly pleased that the company can once again do business with its integral US suppliers, there are still concerns that the future of the company is no longer completely secured.
That’s because the Chinese tech business must now ensure it diversifies its supply chain so that its no longer reliant on just one market.
In addition, some US lawmakers have requested the ban on ZTE working with US companies be reinstated, as they believe ZTE Corp remains a security threat to the US.