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Investors wipe $3 billion off China’s ZTE market value after US settlement

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Signage is displayed at the ZTE headquarters in Shenzhen, China, on Monday, June 4, 2018.

Giulia Marchi | Bloomberg | Getty Images

Signage is displayed at the ZTE headquarters in Shenzhen, China, on Monday, June 4, 2018.

Chinese telecommunications giant ZTE Corp had about $3 billion wiped off its market value as it resumed trade on Wednesday after agreeing to pay up to $1.4 billion in penalties to the U.S. government.

China’s No. 2 telecommunications equipment maker was crippled when a seven-year supplier ban was imposed on the company in April for breaking a 2017 agreement reached after it was caught illegally trading with Iran and North Korea.

The ban, which has prevented ZTE from buying the U.S. components it relies on to make smartphones and other devices, will not be lifted until ZTE pays a fine and places $400 million more in an escrow account in a U.S.-approved bank.

The Hong Kong-listed shares of ZTE slid as much as 41 percent to HK$14.98, their lowest in a year, following a two-month trading suspension, while its Shenzhen shares fell by their 10 percent limit after it confirmed details of the agreement publicised by the U.S. government on Monday.

Hong Kong’s benchmark Hang Seng index was down 0.5 percent in early trade.

Confirming details of the deal, ZTE said late on Tuesday it would replace its board of directors and that of its import-export subsidiary ZTE Kangxun within 30 days of the June 8 order being signed by the United States.

All members of its leadership at or above the senior vice president level would be removed within the 30-day period, with a commitment that they would not be re-hired, along with any executives or officers tied to the wrongdoing, it said.

It also said in filings on Tuesday that it would work to resume operations as soon as possible after the ban gets lifted, and would republish its first-quarter financial results after assessing the impact of the ban and the settlement agreement.

The case has become highly politicized and a key focus of bargaining talks as Washington and Beijing look to avert a trade war.

U.S. lawmakers have attacked Washington’s agreement with ZTE and plan legislation to roll it back, citing intelligence warnings that ZTE poses a national security threat.

ZTE, with a market value of around $20 billion before its shares were suspended in April, is the world’s fourth-largest telecom equipment maker after Huawei Technologies, Ericsson and Nokia.



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Bitcoin jumps after New York approves Square’s Cash app for crypto trading

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Bitcoin spiked suddenly Monday afternoon following news users of the “Cash” mobile payments app could trade the cryptocurrency in New York.

The largest cryptocurrency by market capitalization gained more than 4.5 percent to $6,793, its highest since Tuesday, according to CoinDesk’s bitcoin price index. Bitcoin was trading near $6,694 as of 3:56 p.m. ET.

Cash is owned by Square and has 7 million monthly active users, the company said in its first quarter earnings call. On Monday, New York’s Department of Financial Services granted Square a virtual currency license, allowing users of the Cash app in the state to trade bitcoin. Bitcoin trading launched for most Cash users in late January.

Bitcoin 12-hour performance

Source: CoinDesk

Bitcoin remains about 10 percent lower for the month, and down 51 percent for the year so far.



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China, Middle East are spending on Sudan, but US policy is ‘confused’

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Turkish President Recep Tayyip Erdogan (C) and Sudanese President Omar Al-Bashir (R) visit in Port Sudan on December 25, 2017.

Kayhan Ozer | Anadolu Agency | Getty Images

Turkish President Recep Tayyip Erdogan (C) and Sudanese President Omar Al-Bashir (R) visit in Port Sudan on December 25, 2017.

Since the U.S. lifted long-standing sanctions on Sudan last October, foreign investors’ interest has started to trickle in, an expert on the region has told CNBC.

But it’s Chinese and Middle Eastern actors who already have first-mover’s advantage, Matthew Kindinger, sub-Saharan African analyst at emerging markets advisory firm Frontier Strategy Group, added.

“Any firm that was prevented from entering Sudan because of the U.S. sanctions now has much larger scope to expand in the market,” he said. “(But) the current administration’s Sudan policy appears to have become confused at the least, or at best a very low priority.”

Given the U.S.’ sanctions, some of which date back to 1997 over human rights concerns and terrorism links, China and countries including Saudi Arabia and the United Arab Emirates have instead been Sudan’s most prominent foreign investors.

“These countries want to maintain access to resource exports, such as petroleum to south Asian markets, and livestock to meet growing food demand in the Gulf states,” Chris Suckling, senior analyst at IHS Markit, told CNBC.

Sudan, located on the Horn of Africa and one of the continent’s largest countries by area, has suffered from brutal conflict for much of its history and saw its economy hit hard by the 2011 succession of its oil-rich southern region. The International Criminal Court (ICC) has issued President Omar al-Bashir with arrest warrants for war crimes twice in the past decade.

Given its troubled past — and present — the country is yet to fully capitalize on its strategic potential.



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United Arab Emirates gives Ethiopia $1 billion lifeline to ease foreign exchange crisis

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Crown Prince of Abu Dhabi Mohammed bin Zayed Al Nahyan (L) meets Ethiopian Prime Minister Abiy Ahmed (R) at National Palace in Addis Ababa, Ethiopia on June 15, 2018.

Minasse Wondimu Hailu/Anadolu Agency | Anadolu Agency | Getty Images

Crown Prince of Abu Dhabi Mohammed bin Zayed Al Nahyan (L) meets Ethiopian Prime Minister Abiy Ahmed (R) at National Palace in Addis Ababa, Ethiopia on June 15, 2018.

The United Arab Emirates (UAE) is to deposit $1 billion in Ethiopia’s central bank to ease the latter’s foreign exchange shortage.

The sum is part of a total of a $3 billion aid and investment pledge from the UAE to Ethiopia announced Friday. The news came as Abu Dhabi’s Crown Prince Sheikh Mohammed bin Zayed Al Nahyan visited Ethiopian Prime Minister Abiy Ahmed in Addis Ababa.

Ethiopia’s foreign exchange shortage is due in part to its spending big on infrastructure projects. The current total left in the East African country’s coffers is equivalent to less than one month’s worth of imports, Reuters has reported.

Over the weekend, Ethiopia and neighboring Somalia announced that they were investing in four seaports on the Red Sea to draw in foreign investment. Abiy and Somalian President Mohamed Abdullahi Farmajo, speaking in Somalia’s capital Mogadishu, issued a joint statement of pledges to cooperate on areas including infrastructure and visa services, according to Reuters.

In April, Abiy said that Ethiopia’s foreign exchange shortage could last up to 15 to 20 years, and that more cooperation with the private sector was needed to secure the country’s finances.

The Red Sea coastline is strategic because it leads to the Suez Canal, which serves as a gateway for shipping, moving between Eastern and Western markets.

Landlocked Ethiopia is keen to shore up its international trade infrastructure; for example, taking a stake in the Port of Djibouti in May.

The weekend’s news is the latest in a slew of reforms coming out of the Ethiopian government.

In early June, lawmakers voted to lift Ethiopia’s state of emergency two months early. This was imposed following the sudden resignation of former Prime Minister Hailemariam Desalegn in February following anti-government protests fueled by ethnic tension.



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