The furore over 5G and China’s Huawei continues. And today I’ll reveal how the very same phenomenon is set to play out right across the tech investing spectrum. Think of it as the nationalisation of tech.
But first, what happened?
Vietnam announced it is putting together a 5G network from its own technology. The UK is still not sure which way to go – Huawei or the another way. The US administration is adamant about keeping China’s fingers out of its infrastructure. And Germany wants everyone to make up their mind at last.
Part of me never understood the fear of foreign investment. If the Chinese want to subsidise our telecommunications, they’re welcome to pay for it. If the French want to subsidise our cheese and wine, let them pay for it. If the Germans want to subsidise our airliners, let them pay for it.
Living off foreign taxpayers sounds pretty good to me…
If any foreigners ever cause a problem, you just take their assets, intellectual property and infrastructure from them. You abuse, you lose. That’s what happens to the Russians who meddle in UK politics when they get sanctioned.
But the 5G story has me more worried. Because of just how extraordinarily powerful 5G will be. It could be the network that connects everything to everything else. From toasters to self-flying taxis. So perhaps allowing a foreign government access really is a bad idea.
The coming 5G boom is so extraordinary that investors need to have a stake, if you ask me. And Eoin Treacy explains how you can do so here.
But how will the 5G investment trend play out now that geopolitics is involved?
In the latest issue of The Fleet Street Letter Monthly Alert, we point out that there are plenty of friendly tech companies providing 5G technology. Boris Johnson’s recent pretending that there aren’t has been a little odd.
Some of them make good investments, so I can’t reveal subscriber information here. The point is, you don’t have to go the Huawei.
But let’s apply the same thinking more broadly. Because it’s not just 5G that’s important, geopolitically.
I believe companies on the stockmarket, and high street, are about to be classified into two different groups. Safe Western-friendly companies and companies under the thumb of foreign governments like China and Russia.
Military spending and manufacturing are obvious examples, but the scope of what’s politically sensitive is about to get a lot wider.
If Boaz Shoshan and I are right about this, there’s about to be an almighty rift in what are considered politically correct companies and which are not. To do business with, to buy products from and to invest in. A bit like the climate change story, but with a nationalistic theme instead.
Today’s Exponential Investor is all about what investing looks like in a world where there’s a bogeyman.
We’re not really used to that any more. Economic considerations have come before the geopolitical for many years now. But that doesn’t seem to be so popular of late.
As some see it, China used this state of affairs as cover to further its political interests instead of playing the same commercial game others were. In Russia, the same applies to gas exports especially.
And so, these days, tech investors need to pay attention to how things look geopolitically too. Usually that amounts to an opportunity, not a threat. A home-grown hero developing 5G tech can actually compete with the combined might of Huawei and the Chinese government simply because the UK government wants it that way. The same on defence and energy.
Yesterday we looked into why tech investors should pay attention to monetary policy too. It’s a strange new world, with odd considerations for tech stocks.
Typically, UK investors have been able to invest in global companies right here in the FTSE 100. They didn’t need to diversify internationally as much as many other countries’ investors.
My real point today is that it may be time to rotate out of these international conglomerates, unless they’re avoiding China and Russia already…
I think it’s time to go native. Become a patriotic investor. Because UK spending on tech and other industries will be doing just that.
Until next time,
Editor, Southbank Investment Research