Markets in Asia Gain After Trump, Kim Summit Announcement
Markets in Asia moved up following the announcement from the White House that U.S. President Donald Trump plans to meet with North Korea’s Kim Jong Un.
Vice President Pence said Trump-Kim talks this May show US strategy is working.
South Korea’s Kospi index reached its highest point since October, and Japan’s Topix Index increased 1.8 percent, Bloomberg reported Friday.
The announcement means North Korea will suspend all missile tests in the weeks leading up to the planned May summit and mitigates financial risks that have been typically associated with the Korean Peninsula.
“Plans to hold a summit are a plus, though it will take time for it to lead to an actual resolution. The ‘Korean risk’ factor in Japanese equities will somewhat be reduced, pushing up prices,” said Soichiro Monji of Daiwa SB Investments Ltd.
The “safe-haven” assets that investors usually seek in the event of an escalating geopolitical crisis have also dropped in value: The Japanese yen declined the most since February, gold fell and the cost of insuring South Korean sovereign bonds against non-payment also dropped, according to Bloomberg.
Stock markets in China also jumped, with the Shanghai Composite Index closing up 0.57 percent at 3,307.17, and Shenzhen’s ChiNext, also known as China’s Nasdaq, climbed 3.53 percent to close at 1,856.46, according to South Korean news agency Yonhap.
Investors may also be factoring in risks the planned talks will not produce significant outcomes.
“Given how talks like this have happened before but been betrayed with no material results, for the mid to long term, it’s still unclear and would have a limited impact on the markets,” said Shigeki Yoshitoshi, of Australia & New Zealand Banking Group in Tokyo.
Kim, who has reportedly expressed an unprecedented level of interest in mending fences with South Korea and the United States, showed a more congenial side to visiting South Korean officials, according to South Korean news service News 1.
Kim told the delegation South Korean President Moon Jae-in must have “endured hardships because of the missiles.”
“[Moon] no longer needs to lose sleep in the early morning hours,” Kim reportedly said, referring to the suspension of tests during the ongoing détente.
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