Horizons newsletter – Week 11 // 2017

Horizons newsletter – Week 11 // 2017

Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
Do you have a question about the digitization of consumer’s daily lives? As a research-driven investment company, we want to be relevant to you, so please provide us with your questions and remarks. Your feedback will help us to drive our research agenda.


The new sea routes across the North Pole
As a result of climate change, the North Pole is melting. This will have a number of environmental effects, but it will also affect global international relations. First there is the growing accessibility to the vast Arctic energy resources. More important however, is the possibility of sea trade through new northern routes. Historically the opening of new trade routes has greatly affected global relations. Reaching Asia through the Cape of Good Hope undermined the Ottoman Turks’ power over the Silk Road. The Panama Canal helped the United States to become a power in East Asia. And because of Europe’s trade with Asia, global hubs emerged in Malta, Cyprus, Dubai, Singapore, Hong Kong and Shanghai. What could be the effect of North Pole routes? Trade between Europe and certain Asian countries could change: the new Northern route from Shanghai to Hamburg would for instance be 2.800 miles shorter.  Ports in Northern Europe and Russia could suddenly become hubs along blossoming new trade routes, creating new economic dynamism and, like in the past, Hegemonic power shifts.

Read more about this topic in our Deep Dive Future trade routes across the North Pole.

The phoneless generation
5G featured prominently at the 2017 Mobile World Congress in Barcelona. This fifth generation of mobile network technology promises to deliver higher speeds and lower latency, thus empowering boundless connectivity. Already, companies such as Uber and Lyft are taking into account 5G capabilities when developing driverless car services, showing – according to AT&T – that 5G develops differently than previous networks. These were built out well before there were applications that could sufficiently take advantage of them. What is the same, however, is that the industry is getting excited about the potential, but is overlooking the immediate reality. 5G needs time to develop with commercial implementations likely to start beyond 2020. Nevertheless, when it is rolled out, 5G will enable faster internet, but also the collection and processing of more intelligence from smart lampposts, connected homes and driverless cars that are already being developed, but are held back  by high latency and energy consumption of current networks. In that world everything can be connected to the mobile network, not just your phone.

Loving the long term
According to economist John Maynard Keynes, the separation of management and ownership of a company leads to an increased short-term focus on financial results instead of long-term performance. Research from Barton, Bailey and Zoffer shows that many executives believe their companies’ strategic planning horizons are too short and that short-term pressure has increased. Moreover, in another report the same researchers found that companies with a longer-term orientation outperform short-term companies on a number of key economic variables. A similar short/long-term focus applies on investing. Keynes used the ‘beauty contest’ metaphor to describe how investors with a short-term focus on trading and financial results pay most attention to what other investors think, instead of the fundamental value of the underlying asset. Data shows that since 1975, the average turnover ratio of U.S. stocks almost doubled every decade, indicating a shorter-term investment horizon. So, comparable to companies with a long horizon, investors with an understanding of the long-term dynamics and fundamental value of assets eventually should have a competitive edge over their shorter-term peers.