Huawei 5G is the world’s biggest telecommunications equipment manufacturer in the world. And the China-based company is caught up in the U.S.’s effort to prevent espionage by Chinese entities.
You’ve probably seen Huawei pop-up in many headlines recently.
But what does that have to do with trading? Why should you care about Huawei?
Newsflash: 5G is coming. And it’s a BIG step up from the 4G networks we use now. 5G will provide much faster internet speeds for mobile devices and have the capacity to support more wireless connections than 4G networks.
What does that have to do with Huawei?
Well, Huawei is effectively being pushed out of the U.S. 5G network.
Let’s take a quick look at why you, trader, should care about this news and how you can use this knowledge moving forward.
Table of Contents
The U.S. Huawei 5G Ban
So why is Huawei being pushed out of U.S. markets?
Well, there’s not really much to talk about here — it’s exactly what it sounds like.
Huawei is one of the companies affected by an executive order that lets the U.S. government block transactions that involve technology that may pose a risk to U.S. national security.
Basically, the U.S. considers Huawei a threat, as the company’s technology could potentially be used for espionage purposes. So Huawei is one of the companies that’s being restricted from doing business in the U.S.
The U.S. 5G Market
Like I said earlier, 5G is coming. And again, it’s a huge upgrade from our current 4G networks.
Huawei is one of the global leaders in 5G development. If the U.S. wasn’t pushing Huawei out, it would likely play a major role in the U.S. 5G market. But, Huawei is restricted in the U.S. And that means there’s a big gap in the developing 5G market…
What does this mean?
Well, I think this can make room for a lot of great opportunities for small-cap stocks.
Small Cap Stocks
First of all, what’s a small-cap stock?
A small-cap stock is just a stock with low stock market capitalization.
How does this relate to Huawei 5G and the U.S. 5G market?
Well, we’re looking at a huge new development in the communications space where one of the world’s leaders is being phased out of U.S. markets. That means Huawei won’t dominate the sector. So smaller companies will have the opportunity to gain some meaningful market share in the 5G space.
While 5G continues to grow and people become more aware of its significance, traders will be on the lookout for companies making waves in this new market.
Without a major company like Huawei controlling the market, any smaller company that announces plans to move into the 5G sector has the potential to become a much bigger success.
Since we’re still in the early stages of 5G development, now’s the perfect time to start scanning for these small-cap stocks and adding them to your watchlist.
We’ve Seen This Before
This type of situation happened many times in recent memory.
Just look at the spread of marijuana legalization across the U.S. and in Canada. Since marijuana has long been illegal in the U.S., no company had a monopoly over the marijuana industry in states where it’s now legal.
This gave marijuana startups the opportunity to take advantage of a burgeoning market. As these new companies kept popping up, their stock prices went wild as traders moved on the new sector.
You could also take a look at the cryptocurrency craze that started when Bitcoin went on a crazy run and reached historically high prices.
The crypto hype caused by Bitcoin made traders stay on the lookout for new altcoins popping up in this sector.
Essentially, without a major company dominating a certain market, traders will be looking for smaller companies to fill the void.
StocksToTrade Pro
To get in on these small-cap stocks, you need to be able to identify them before it’s too late. That means paying attention to news catalysts, market movements, and creating watchlists.
StocksToTrade Pro can help you with all of that. StocksToTrade Pro is a premium stock screener designed to help traders like you identify new trading opportunities.
It comes with access to several resources like watchlists, quotes, indicators, news updates, social media buzz, and more to help you keep tabs on the flourishing 5G market and any other stocks you want to trade.
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Final Thoughts
Huawei being pushed out of the U.S. 5G market is tremendous news for small-cap stocks around the country.
With Huawei out of the way, smaller companies will have plenty more room to operate in the growing 5G sector — giving traders different opportunities to take advantage of this new technology.
How long with the restrictions on Huawei last?
Nobody can say for certain. But considering these restrictions are in place to prevent espionage, there’s a good chance Huawei will be out for the market long enough for small-cap stocks to make some serious moves.