(Bloomberg) -- ZTE Corp (HK:0763). plummeted as much as 21 percent after American lawmakers green-lit a bill to restore severe penalties on the Chinese telecoms gear-maker and potentially up-end a deal struck with the White House to allow it to get back in business.
Its Hong Kong shares slid to their lowest since July 2016, while its Shenzhen stock fell its 10-percent daily limit on Tuesday. The U.S. Senate passed legislation on Monday that would restore penalties on the company, complicating President Donald Trump’s efforts to ease sanctions on ZTE after it pays a record fine and reshuffles management.
The agreement was struck after the U.S. in April blocked ZTE’s access to U.S. suppliers, saying it had broken a sanctions settlement and then lied about it. That prompted the company to declare it was shutting down just weeks after the ban took effect. It was deemed a key Chinese demand as the world’s two largest economies try to avoid a trade war and negotiate the denuclearization of North Korea. After a personal plea from Chinese President Xi Jinping to help the company get back into business, Trump last month instructed the commerce department to find a solution to save ZTE.
Commerce Secretary Wilbur Ross and Treasury Secretary Steven Mnuchin in recent weeks have tried to persuade lawmakers of the administration’s approach to ZTE, but legislators said the deal failed to address their national-security concerns.