(Reuters) - Shares of U.S. optical component makers jumped on Monday after President Donald Trump pledged to help ZTE Corp (000063.SZ) (0763.HK) “get back into business, fast” after a U.S. ban hurt the Chinese telecom equipment maker.
Trump’s announcement was a stunning reversal, given Washington’s tough stance on Chinese trade practices that have put the world’s two largest economies on course for a possible trade war.
“Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter on Sunday, adding that he and Chinese President Xi Jinping were working together on a solution for ZTE.
Shares of optical component makers had tumbled in the past month since the U.S. Commerce Department banned American companies from selling to ZTE for seven years as a punishment for breaking a 2017 agreement.
Trump’s unexpected tweet was reposted widely by ZTE employees on social media with comments expressing relief, taking it as a sign of an impending settlement - a sentiment that was also expressed by Northland Capital Markets analyst Tim Savageaux.
The announcement makes “an overall return to normalized spending in China ... the most likely outcome, with any concerns about a similar fate for Huawei likely to come out of shares across the group as well,” Savageaux said in a note.
The U.S. Department of Defense has stopped selling mobile phones and modems made by China’s Huawei [HWT.UL] and ZTE in stores on its military bases, citing potential security risks.
Shares of Acacia Communications Inc (ACIA.O), which got 30 percent of its total revenue in 2017 from ZTE, jumped a little more than 13 percent in morning trade.
Shares of Oclaro Inc (OCLR.O), which received 18 percent of its fiscal 2017 revenue from ZTE, rose about 6 percent. Lumentum Holdings Inc (LITE.O), which has signed a deal to acquire Oclaro, rose 3.5 percent.
None of the companies immediately responded to calls and emails seeking comment.
To view a graphic on Optical product makers' shares since ZTE ban, click: reut.rs/2rEPT8C
Reporting by Shreyashi Sanyal and Savio D'Souza in Bengaluru; Editing by Maju Samuel