Xiaomi is breathing sigh of relief after Trump-era restrictions are banned against it
Shares in Xiaomi jumped Monday in Hong Kong after a US judge temporarily blocked a move by former President Donald Trump's administration to prevent Americans from investing in the Chinese smartphone maker.
Xiaomi shares rose more than 10 percent in early trade, the largest intraday gain in nearly a month, but it trimmed its gains since then, and the stock was still up about 8 percent in early afternoon trade.
In January, the Trump administration designated Xiaomi as one of several Chinese Communist military companies, or CCMC, which led to financial restrictions that were due to take effect next week.
This means that the world's third-largest smartphone maker was subject to an executive order issued in November restricting US investors from purchasing shares or related securities of any company under this designation from the US Department of Defense.
After announcing the ban, the smartphone manufacturer faced the possibility of being written off from US stock exchanges and deleting it from global benchmarks, eliminating up to $ 44 billion from its market value.
Xiaomi said at the time: It is not owned, controlled or affiliated with the Chinese military, and then filed a lawsuit to revoke the rating and stop the investment ban.
In a ruling issued on Friday, US District Judge Rudolph Contreras granted Xiaomi a preliminary injunction against the Trump era order.
The judge said: Without assistance, Xiaomi may suffer irreparable damage in the form of severe, irreparable economic injuries.
Contreras writes that there is clearly a lack of substantial evidence to support the discovery that Xiaomi is a Chinese Communist military company.
Xiaomi said: It is pleased with the ruling and continues to ask the court to declare the classification illegal and remove the designation permanently.
"Xiaomi reiterates that it is a widely owned, publicly traded and independently managed company that provides consumer electronic products for civil and commercial use only," the company said in a statement.
She added: Xiaomi believes that the decisions to classify it as a Chinese Communist military company are arbitrary and volatile.
The judge sided with the Chinese company in the lawsuit, which argued that the move was arbitrary and volatile and deprived it of its rights in due process.
Founded more than a decade ago by billionaire businessman (Lei Jun), Xiaomi is the world's third-largest smartphone maker by size, surpassing Apple in the third quarter in smartphone sales.
Xiaomi's ruling could pave the way for more companies to challenge the limitations of the Trump era, as non-state-owned companies, such as Huawei, have a better chance of winning a similar lawsuit.