ZTE’s market shares have dropped by 16 percent amid reports that the Chinese telecoms company may face “criminal and civil liabilities under U.S. laws” after it allegedly violated rules on exporting American materials to Iran.
ZTE is experiencing the massive effects of accusations that it violated U.S. laws when it traded goods with Iran, The Wall Street Journal said on Thursday.
Apparently, trade restrictions imposed on the Chinese tech firm in March were only the tip of the iceberg as reports now reveal "uncertainties" that the company is facing.
However, CNN Money explained that there are other reasons why the company's shares plummeted to such numbers, which is lower than preliminary estimates in January.
According to the outlet, investors were reacting to all of the events that happened since the trade sanctions were imposed, including the reshuffling of ZTE's top bosses as well as the disappointing financial results it showed for their 2015 report.
Despite this, analysts still believe that ZTE is actually succeeding in restoring their credibility to the U.S. trade regulator.
"We think ZTE's management reshuffle suggests progress in its negotiations with the U.S. government toward final resolution of this case," explained Nomura Securities analysts on Thursday.
According to Nomura, ZTE might still face a fine for the allegations, but they will definitely be back on their feet once all the issues blow over.
"We don't think this case will seriously affect ZTE's business relationships with existing telecom operators," the analysts added.
Furthermore, Zhao Xianming, ZTE's new CEO, assured the staff and the investors in a letter that the new leaders of the company will take "extra measures to ensure that legal compliance and anti-corruption processes eliminate any possibility of non-compliance."
As of Thursday, ZTE's stock market price is at 12.70 Hong Kong dollars ($1.64) and has resumed trading in Hong Kong, per the South China Morning Post.