North Korea - Dec 19, 2011 - 09:44
Asian equities and US stock index futures fell, with South Korean shares tumbling as much as five per cent, while the dollar gained on safe-haven appeal after news of the death of North Korea leader Kim Jong-il raised fears of regional instability.
The Korean won fell 1.8 per cent on the news, which financial markets fear could mean instability in northeast Asia because of the unpredictability of a leadership transition in the impoverished, secretive North.
Commodities also fell broadly, as investors reacted by shedding riskier assets in favour of the safe-haven dollar.
"The risk or fear that the death of Kim Jong-il will lead to provocation by North Korea is pressuring selling," said Hiroyuki Fukunaga, CEO of Investrust, in Tokyo. "Right now, there's going to be a sell-off as part of a risk-off."
The key focus will be how the succession proceeds.
"It is hard to predict how things in North Korea will develop from here this time. The news comes at a time when financial market had already been in fragile shape," said Bae Sung-young, a market analyst at Hyundai Securities. [Reuters]