The threat of war with North Korea is bad news for South Korean stocks
It’s been a rough week on the South Korean stock market, amid escalating tensions with its northern neighbour.
Following three straight days of losses, South Korea’s KOSPI stock index has opened more than 1.3% lower this morning.
That takes the total fall for the week to almost 3%. A short time ago, South Korean electronics giant Samsung was down 1.7% in morning trade.
Despite the fall, the index is moving lower from a high base — it reached an all-time high above 2,400 at the end of July.
The new record for South Korean stocks was driven by a consistent flow of funds in emerging market stocks in Asia in the first half of 2017.
But the recent geo-political tensions between North Korea and the US have shown no signs of abating this week, with more inflammatory statements from both sides overnight.
Although crises of this nature can often cause dramatic falls in stock prices, research shows that the volatility is often short-lived.
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