With many enabling conditions, the stage appears set for another tech bubble in the stock markets. Liquidity is ample, and we now also have a likely trigger for the next round of hype-driven rally: 5G.
Talking of liquidity, central banks in both US and China have begun to ease their monetary policies. The added liquidity needs to go somewhere, and 5G related investments could be a natural choice.
Investment is always a combination of reality and hope, or imagination.
We are seeing surging demand for base station infrastructure as the 5G era unfolds — this is the reality part.
But what sort of 5G applications would become popular?
So far, the most talked about is Internet of Things, a technology that enables machines to talk to each other. People keep talking about how 5G is going to change the world, but nobody seems to have a clear idea exactly how.
5G is a superior technology, but who is going to foot the bill for the expensive infrastructure costs?
A 10GB offering of 4G service costs around HK$300 per month. How much will 5G service cost? How many customers would be willing to pay for that?
So far, the demand projection for 5G is largely based on hope and imagination. But that won’t discourage people from speculating on the theme.
The US internet and tech stocks may be a bit overhyped, but the valuations are still reasonable. In the second half of this year, with more liquidity and increased chatter about the potential of 5G, I believe we could again see another tech bubble.
This article appeared in the Hong Kong Economic Journal on March 11
Translation by Julie Zhu
[Chinese version 中文版]
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