Today a fierce battle over the future of technology is being fought over 5G. A battle in which success will be all about gaining investment capital.
Pictured below: Attorney General, William Barr, has been aggressively pushing for investments in Nokia and Ericsson.
While the United States government is considering expensive tax breaks and lending programs to support both Nokia and Ericcson, it is not considering the most powerful form of support available.
This would be adding Nokia, for example, to the Standard and Poor’s 500 index, a move that would likely inflate its stock at least 20 percent, providing valuable capital for expansion.
Today most capital is being allocated based upon indexes, with the S&P 500 being the largest. Companies like Nokia that are not in the emerging markets nor the signature United States index are basically falling through the cracks as they say.
See related post regarding how China is manipulating the MSCI indexes, resulting in at least $1 trillion in capital moving to China domicilied firms in the last two years alone.
There is an irony here because many large firms based in United States have done ‘tax inversions” over the last decade, two of the largest being Medtronic and Eaton, now both based in Ireland.
Of course these are nothing but epic tax frauds in which the headquarters never really changed, only the paperwork.
In Nokia’s case, they could do a similar type “ownership inversion,” in the reverse direction, that is rapidly incorporate in the United States in order to gain inclusion in the S&P 500. Part of the deal could be significant clauses that essentially maintain control in Helsinki, where Nokia is now based.
This strategy won’t cost United States taxpayers a penny and will simply recognize Nokia already has significant operations in the United States, which of course will grow substantially with 5G.
Disclosure: I personally own Nokia stock and have also recommended it as a suitable long term oriented investment for most clients. Shares were purchased in December 2019 for the first time.