Sent in by Sharon Noble:
From Moneyweek, 10 June 2011
There is no ”¨shortage of stuff ”¨out there to ”¨make investors ”¨feel nervous. ”¨The euro could ”¨get blown apart if a long, ”¨hot summer of protest in ”¨Greece and ”¨Spain boils over ”¨into civil unrest. ”¨The Chinese ”¨economy might suddenly turn down, ”¨removing just about the only source of ”¨global growth. Inflation might suddenly ”¨rip out of control, provoking central ”¨banks into raising interest rates sharply.
But there is one other risk that most ”¨people probably haven’t thought about. ”¨What if mobile phones really do give you cancer? Mobile technology has the ”¨potential to be another tobacco – a huge ”¨and powerful industry that was just about ”¨destroyed by the unfortunate fact that it ”¨killed people. If this happens, hundreds of billions will be wiped off stockmarkets ”¨around the world.
Of course, there is still no proven link ”¨between mobiles and brain disease. The ”¨World Health Organisation (WHO) is not ”¨claiming that there is. Its International ”¨Agency for Research on Cancer gathered ”¨together 31 experts in Lyon last week to ”¨review the available evidence. It concluded ”¨that there was a ‘possible’ link between ”¨mobiles and a type of cancer called ”¨glioma. The WHO has five rankings of ”¨cancer risk, ranging from carcinogenic to ”¨probably not carcinogenic. The ‘possible’ ”¨ranking is right in the middle of the range. ”¨So it’s not saying there is a definite link. ”¨Yet it isn’t ruling one out either.
For anyone tracking the industry, that isn’t ”¨particularly helpful. Lots of studies have ”¨been done of potential links to cancer, and none have been very conclusive so far. Mobiles appear to have some health ”¨effects. Against that, there has been no big increase in the rates of brain cancer in ”¨the 20 years or so since mobiles became a ”¨ubiquitous part of everyday life. It’s hard ”¨to assess the data accurately because brain ”¨cancer is a relatively rare condition, so ”¨there are not very many people to study.
Over a billion handsets are sold every year
But just because cancer rates haven’t taken ”¨off yet, it doesn’t mean they won’t. People ”¨were smoking heavily for a long time ”¨before the damage that tobacco does to ”¨your health became apparent. Asbestos ”¨was widely used in building for decades ”¨until the risks were discovered. Right now, all that anyone can say is that there ”¨is some form of risk, which the medical ”¨experts will need to keep an eye on. What ”¨we do know for certain is that, if a link ”¨were ever proved, or were simply to move ”¨up from possible to probable, then the ”¨economic implications would be huge. That’s mainly because this is a massive ”¨industry. According to the International ”¨Telecommunication Union, there are now ”¨5.3 billion mobile-phone subscriptions. ”¨That takes in 77% of the world’s ”¨population. More than a billion handsets ”¨are being sold every year. Vast quantities ”¨of capital have been poured into building ”¨mobile networks. The rise of smartphones ”¨means that people are doing more with ”¨and spending more money on their phones ”¨every year. The rise of tablet computers ”¨will only send those figures even higher.
On just about every major bourse, the ”¨big mobile-phone players are among the ”¨indices’ leading companies. Vodafone – with a market value of Â£83bn – is a giant ”¨of the FISE. France Telecom, which owns ”¨Orange, is one of the largest businesses on ”¨the CAC-40. The world’s largest mobile ”¨operator, China Mobile, is also one of the ”¨world’s biggest companies. Nokia may be ”¨struggling to re-invent itself, but it is still ”¨the world’s major handset manufacturer, ”¨and worth $25bn. Much of the South ”¨Korean stockmarket depends on the ”¨mobile divisions of Samsung and LG. ”¨New players, such as Taiwan’s HTC, have ”¨soaring share prices (indeed, it recently ”¨overtook Nokia in value). And, of course, ”¨Apple, which is now critically dependent ”¨on its iPhone, is now the third-biggest ”¨company in the world. It doesn’t even stop there. Microsoft and ”¨Google have invested fortunes in creating ”¨mobile software divisions. Manufacturers ”¨of chips and other components help to ”¨sustain the commodities boom. Many ”¨retailers depend on the sales of mobile ”¨phones, as do the new generation of app writers. In short, mobile phones have fuelled much of the growth of the ”¨world economy in the past decade. A link ”¨between this technology and cancer would ”¨prove an economic as well as a medical ”¨catastrophe.
So what can investors can do ”¨about it?
For starters, investors should be ”¨monitoring the medical data and keeping ”¨up with the latest developments. They ”¨should be demanding that the mobile ”¨companies do everything they can to ”¨research the risks – and mitigate them. ”¨There is no point in simply denying that such a risk exists, in the way that the tobacco industry did for decades. ”¨Investors should also be preparing an exit ”¨strategy. If a link is ever proved beyond a ”¨doubt, you don’t want to be holding the ”¨shares or bonds of any of the main players ”¨in the industry. You might want to avoid ”¨holding equities full stop – the knock-on ”¨effects for the rest of the markets would ”¨be so severe.
Meanwhile, don’t give up on some fairly ”¨old-fashioned technologies. Fixed-line ”¨operators, such as British Telecom, could ”¨be set for one of the greatest bounce backs ”¨of all time. The shares yield 4%, so tuck a ”¨few away. If we all decide to get rid of our ”¨mobiles and start using the landline again, ”¨these shares will soar.
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