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Asia300

ZTE suffers nonstop sell-off as trade clash pummels China shares

Electric car maker BYD and pork producer WH Group also caught in storm

The inside of a ZTE smartphone. The company's shares went limit-down in Shenzhen for seven straight sessions starting June 13.    © Reuters

SHANGHAI/HONG KONG -- The pain from U.S.-China trade frictions is rising for Chinese stocks, with ZTE still reeling despite having reached a deal to lift a crippling ban on buying American technology. 

The telecommunications equipment maker's shares dropped by the Shenzhen market's maximum daily limit for seven straight sessions starting June 13, when trading in ZTE resumed after a preliminary settlement with U.S. authorities. The stock has lost more than half its value from its level before trading was halted in April.

Fears of a cash crunch have eased since ZTE announced last week that it would seek more than $10 billion in credit lines from two Chinese state-owned banks. But the outlook for the smartphone maker is far from clear. "It is impossible to see how it will rebuild its U.S. business," said an analyst at a China-focused brokerage.

Nor is ZTE the only Chinese casualty of the trade clash with U.S. President Donald Trump.

Shares in display maker BOE Technology Group have tumbled by nearly half from a year-to-date high reached in January.

The stock has slid on the view that it falls into the category of Chinese companies that the Trump administration accuses of intellectual property abuses. BOE has also suffered from the troubles at ZTE, which it supplies with components.

BYD, a maker of electric cars and car batteries, is also caught up in the sell-off. Low-emission cars form part of Beijing's "Made in China 2025" plan for industrial modernization, which the Trump administration sees as a threat to America's advantage in high-tech sectors.

Hong Kong-listed WH Group, the world's largest pork processor, has dropped more than 30% from its high for the year as investors worry about its exposure to Chinese tariffs on U.S. pork. The company owns U.S.-based Smithfield Foods, which exports ham and other pork products to China.

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