• 16 JUN 11
    • 0

    Keep an eye on mobile phones – they could 
bring down the global economy …

    Sent in by Sharon Noble:

    From Moneyweek, 10 June 2011

    There is no Ӭshortage of stuff Ӭout there to Ӭmake investors Ӭfeel nervous. ӬThe euro could Ӭget blown apart if a long, Ӭhot summer of protest in ӬGreece and ӬSpain boils over Ӭinto civil unrest. ӬThe Chinese Ӭeconomy might suddenly turn down, Ӭremoving just about the only source of Ӭglobal growth. Inflation might suddenly Ӭrip out of control, provoking central Ӭbanks 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 £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 Ӭabout 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.

    www.moneyweek.com

    Leave a reply →