The crisis in the Korean Peninsular are badly affecting markets – not only in Asia, but in other parts of the world.
According to China Daily, Seoul’s Kospi index shed 0.15 percent, or 2.96 points, at 1,925.98, after initially falling 2.33 percent in its initial reaction to Tuesday’s outbreak of artillery fire on the Republic of Korea’s (ROK) border with the Democratic People’s Republic of Korea (DPRK).
Tokyo’s Nikkei Index ended the session down 0.84 percent, or 85.08 points, at 10,030.11 after falling sharply on opening, while Sydney’s S&P/ASX 200 index fell 0.09 percent, or 4.4 points, to 4,584.7.
Hong Kong’s Hang Seng was up 0.56 percent on Wednesday, while Shanghai’s Composite index rose 1.12 percent after respectively falling following Tuesday’s occurrence in the Korean Peninsular.
Traders said Tuesday’s Korean hostilities were making investors more risk averse, compounding problems such as the Eurozone debt crisis, worries about China’s economy and a United States Federal Reserve forecast of much slower US growth next year than previously expected.
Australia investment adviser Chris Macdonald of RBS Morgans voiced cautious optimism, according to China daily.
“Equity markets have been punched from all angles, but Australia is holding up quite well considering the barrage from China acting against inflation, the Korean skirmish, the European sovereign debt crisis, weak US housing data and the FBI investigation of hedge funds,” he told Dow Jones Newswires.
Meanwhile, the currencies situation recorded a mixed reaction – the dollar rose to 83.84 yen from 83.71 yen, while the euro slipped to $1.3333 from $1.3342.
However, “investors have learned that financial risks generated by South-North Korea tensions haven’t lasted for long,” according to Dow Jones Newswires.
But Asian investors had their first real opportunity to respond to the artillery clash between North and South Korea Tuesday, which sent tensions on their divided peninsula soaring. South Korea’s financial markets opened sharply lower, 2.4 percent before quickly paring losses; the Kospi finished the day only 0.2 percent lowers at 1,925.98. There were signs of a potentially bigger worry in the markets is Spain.
The world’s economy might even worsen should the crisis between North and South Korea develop into a full scale war.