Cookies on the Investment International website
We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on this website. However, if you would like to, you can change your cookie settings at any time.
Continue

New to Investment International?

Welcome, and thank you for visiting our website.

Investment International is the leading publication for investors interested in the world of international investment.

Our aim is to give you intelligent commentary on the most important financial stories, and help you to profit from them. If you've enjoyed what you've read so far why not sign up for our FREE investment alert.

Every week the Investment International team sends out a hard-hitting newsletter packed with news and analysis of the top stories this week plus the best investment opportunities on the market. We always look at the bigger picture like the Eurozone Crisis, and explain how this will affect YOUR investments.


Ask me later
No thanks

Barings’ update on investing in North Korea PDF Print E-mail
News - Economy
Baring Asset Management has commented on investing in North Korea in the aftermath of the death of leader Kim Jong-il.

Mr Kim will be succeeded by his third son, Kim Jong-un, who is thought to be in his late 20s. Swiss-educated Kim Jong-un was named as his father's successor a year ago, and has been groomed for succession since his father's reported stroke in 2008.

The immediate market reaction has been nervousness, with the Korean won off approximately 2% against the US dollar and the South Korean equity market down by a little over 3.4%, in US dollar terms. The market was already off by 2% prior to the announcement on concerns about the global economic environment.

Barings said: “We acknowledge the increased political uncertainty given the new leader's limited experience, but believe the risks to South Korea are limited as both sides of the Korean peninsula have prepared for this scenario for several years. We are likely to see some short-term volatility as Kim Jong-un consolidates his power base and tries to show legitimacy. However, the other powers in the region will do everything they can to ensure stability is maintained.

“Politically, the key thing to look for will be evidence that the ruling elite are backing Kim Jong-un. This could come in the form of acceptance of foreign aid, or widespread media coverage of the new leader providing "on the spot guidance" to workers as the propaganda machine establishes him as a worthy successor to eternal president Kim il-Sung.

“Externally, we will be looking for signs of support from China, North Korea's most important political partner. Official support or a state visit, either to Pyongyang or of Kim Jong-un to Beijing, would be a strong indicator that conditions have stabilised again.

“The economic links between North and South Korea are very limited with little prospect of contagion from any possible regime change in North Korea. In the very long term, a gradual integration between North and South Korea remains a likely outcome, but not something we envisage in the short to medium term.

“We think it is unlikely that there will be lasting effect on the Korean market from Kim Jong-il's death. Previous experience shows us that events in North Korea have not adversely affected the Korean market for more than a week, and we see no reasons for an exception here.

“We have not changed our investment strategy in the Baring Korea Trust, where our focus remains on the technology sector, and beneficiaries of domestic demand. We remain positive on the prospects for the Korean market across our regional Asian equity and Global Emerging Markets portfolios.

“Given the strong valuation support in the market we are willing to live with the short-term market volatility that comes with political change. We will continue to monitor the situation carefully however, and would be likely to reassess our position if the transition of power became disorderly.”

 

 

 

Most Read

Latest Guides

New Build UK Student Investment
New Build UK Student Investment
Download

UK Airport Car Park Investment
UK Airport Car Park Investment
Download

UK Airport Car Park Investment
Hever Hotel
Download

Holiday Home Rental Guide
Holiday Home Rental
Download

Investing in Buy-to-let
Investing in buy-to-let
Download

Investing in buy-to-let
Investing in buy-to-let
Download

Discover the real power behind your pension
Hever Hotel
Download

Self Invested Personal Pension Guide for UK Expatriates
key
Download

Offshore Banking Guide
Offshore banking Guide 2010-2011
Download
Pension Planning Guide
International Pension Planning Guide 2010-2011
Download
Eurozone Crisis
Eurozone Crisis Report 2010-2011
Download
Tax Guide
International Tax Guide 2010-2011
Download
Follow us on Twitter
Find us on Facebook