NK Missile Threat: Market Implications

June 2006 | Market Strategy

Concerns that North Korea may imminently test launch its Taepodong 2 intercontinental ballistic missile are adding to downward pressure on South Korea's Kospi equity index and the won currency. Japanese markets will also be rattled somewhat, if the launch goes ahead, given the country's proximity to the Korean peninsula and its poor relations with Pyongyang. The missile test threat has coincided with worries in South Korea and Japan about a potential slowdown in China, after the authorities there raised bank reserve requirements last Friday, with effect from July 5. Nonetheless, in the past Northeast Asian markets have proved resilient in

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