U.S. Not Done with ZTE

Strangely enough, the market seems to know more about the investigation of ZTE than the U.S. Government wants to say.  Juro Asawa and Joanne Chiu wrote a story for the Wall Street Journal [7 April, ZTE Shares Plunge as U.S. Investigation Stirs Concern] that says (1) ZTE shares were suspended in trading for a month and (2) that ZTE admits it might lead to criminal and civil liabilities.

This certainly sounds like something more than the "normal turnover of leadership" that ZTE has led inquirers to understand.  The stock dropped 10% before trading ended, but is still recommended as a "buy".  That's because the market always figures these things will be worked out and the stock will go back up.  The article says ZTE is cooperating with the U.S. Government, but that likelihood is not very great given the nature of the charges that were made.  Anyone who reads the documents posted previously knows how deep this action goes.  ZTE was not just bypassing sanctions in a few instances to keep a customer happy.  They were systematically setting up front companies, similar to those described in the recent Panama Papers case, knowing what sanctions they were violating on Iran's behalf.  And, other Chinese companies were doing it too.  The actions had to be known to the central government.  Even the markets cannot ignore the Chinese government involvement with its companies which runs deep and factors in whether they are successful.  They do what they are told.