The U.S. action last week was sparked by ZTE’s violation of an agreement reached after it was caught illegally shipping U.S. goods to Iran. American companies are estimated to provide 25-30 percent of the components used in ZTE’s equipment.

Chinese mutual fund managers cut the value of the stock in their portfolios by 20-30 percent in a spate of announcements over the weekend, a blow to ZTE that suspended trading in its mainland and Hong Kong shares on April 17.

Around 40 Chinese mutual funds have adjusted the valuation of ZTE in their portfolios since it suspended trading. In the latest batch, five fund managers revalued the stock on Saturday.

Huatai-PineBridege and GTJA Allianz cut their valuation of ZTE’s mainland shares to 25.05 yuan, 20 percent lower than its last trading price. JT Asset Management - the most pessimistic - slashed the valuation to around 30 percent below ZTE’s last close of 31.31 yuan ($4.98).

Several funds with exposure to ZTE’s Hong Kong shares, including HuaAn Fund and Harvest Fund, cut valuations to about 20 percent below the last trading price of HK$25.60 ($3.26).

ZTE, which had a market capitalization of about $20 billion before trading in its shares was suspended, did not respond to a request for comment on Monday.

A ZTE smart phone is pictured in this illustration taken April 17, 2018. REUTERS/Carlo Allegri/Illustration/File Photo
 

The valuation adjustment by mutual funds could be just preliminary, as the real impact of the U.S. sanctions needs to be assessed continuously as the incident unfolds, said Reagan Li, investment manager at private fund house Shanghai V-Invest.

On Sunday, ZTE said it was “making active communications with relevant parties and seeking a solution to the U.S. export denial order”. Earlier, the U.S. Commerce Department said it would allow ZTE to submit more evidence related to the matter.

The threat to ZTE’s business has triggered a broad sell-off in technology shares as investors fear the sector could suffer from the fallout, or that other firms could be targeted by the United States amid escalating trade tensions.

Shares in display maker BOE Technology slumped as much as 6 percent on Monday, even after the firm said it had not received any official information regarding U.S. sanctions in response to rumors in the market that it would be targeted.

The CSI Information Technology index of Shanghai- and Shenzhen-listed tech firms fell 2 percent.

“Investors are asking: who will be next on the U.S. sanction list?” fund manager Li said.