The threat of war with North Korea – implications for investors

Tensions with North Korea have been waxing and waning for decades now but in recent times the risks seem to have ramped up dramatically as its missile and nuclear weapon capabilities have increased. The current leader since 2011, Kim Jon Un, has launched more missiles than Kim II Sung (leader 1948 – 1994) and Kim Jong II (1994 – 2011) combined.

Key points

  • Tensions with North Korea have clearly increased causing volatility in share markets.
  • The risk of war has grown but a diplomatic solution remains most likely although there could still be more volatility before this is finally achieved.
  • Historically, shares have been adversely affected initially on the uncertainty of wars (or threatened wars) with a potential significant economic impact, but have tended to rally well before the conflict is over.

Read the complete Financial Snapshot here.

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