Is 5G the ‘next big thing’ for investors?
- Gauge of China-listed 5G stocks shows 75 per cent jump in past 6 months
- Red flags include US-China friction, policy changes in Beijing, costs for companies
The global 5G race has set off a powerful rally in Chinese telecom stocks. And what we’re seeing now may just be the beginning of exceptional opportunities for savvy investors, analysts and traders say.
As countries around the world race towards a 5G future of driverless cars and wired homes, Chinese telecommunications equipment makers and suppliers are scrambling to make their mark.
Chinese network operators are set to spend hundreds of billions of dollars on buying new 5G base stations over the next few years to build the next generation of telecom networks.
This means massive orders for main equipment vendors to build them, with the top players – privately held Huawei Technologies and Hong Kong-listed ZTE – set to snap up the bulk of them. The money will then trickle down to their suppliers of an array of telecom components.
The prospect drove a jaw-dropping 75 per cent surge in a gauge compiled by Wind of 76 China-listed, 5G-related stocks over the past six months. That dwarfs the 22 per cent rise in the benchmark Shanghai Composite Index over the same period.
One leading stock is Shenzhen-listed Wuhan Fingu Electronic Technology, which has soared 408 per cent since it said it was providing customers – its biggest client is the telecom giant Huawei – radio frequency devices to conduct 5G field trials in October.
