What did ZTE actually do wrong?

Shares in ZTE plunged 40% on Wednesday as the Chinese tech company reels coming from a crippling US ban on the supply of crucial parts.

The Hong Kong-listed stock of ZTE (ZTCOF), which makes smartphones along with some other telecommunications equipment, had been suspended for the past eight weeks after the US Commerce Department blocked American firms coming from selling parts or providing services to the company.

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Commerce Secretary Wilbur Ross announced a deal last week to lift the ban, which had brought ZTE’s factories to a standstill. Under the agreement, the Chinese company will have to pay a fine of $1 billion, set aside another $400 million, completely overhaul its senior management along with bring on board an American monitoring team.

ZTE said in a statement late Tuesday which This particular had asked for its shares to resume trading. On Wednesday morning, they nosedived 40% to below 16 Hong Kong dollars ($2.04), their lowest level in more than a year.

Related: ZTE gets a lifeline in US deal. What happens today?

Analysts had predicted ZTE shares would certainly fall sharply when they resumed trading. They said the lengthy ban has cost the company billions in lost revenue, strained its relationships with customers along with hurt its reputation.

There will be also a risk which the Trump administration’s move to lift the ban on ZTE could be undercut by Congress.

A group of senators has moved to attach an amendment to reimpose any penalty removed by the Trump administration on the firm to an annual defense policy bill which will be required to pass inside coming days.

The US government said This particular imposed the ban in April because ZTE violated a 2017 agreement in which the Chinese company admitted to evading sanctions on Iran along with North Korea.

Related: Senate may deal Trump trade defeat on ZTE

nevertheless Trump then announced in mid-May which he was working with Chinese President Xi Jinping to find a way to get ZTE back into business. The idea of ZTE being used as a bargaining chip in trade negotiations with China angered lawmakers, who view the company as a national security issue.

In its statement late Tuesday, ZTE said This particular will “assess the full impact” of the ban along with the fresh deal with the US government along with disclose This particular in an update earnings Discharge. This particular didn’t specify when This particular would certainly do so.

Experts say the company faces challenges in getting its factories up along with running again while also overhauling its management to meet the terms of the US deal.

ZTE said Tuesday This particular will resume operating activities affected by the ban “as soon as practicable.”

sy88pgw (Hong Kong) First published June 12, 2018: 8:53 PM ET