North Korean upheaval hits Asian tech markets

North Korean upheaval hits Asian tech markets

Summary: Samsung and LG, two of the biggest South Korean technology companies, have seen drops in shares following the announcement of Kim Jong-il's death.

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TOPICS: CXO, Banking
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Several large publicly trading technology companies in Asia have seen a drop in share value today following the announcement of the death of Kim Jong-il, North Korea's leader.

Smartphone giant Samsung saw a drop of 3.6 percent in large cap stocks. Stocks in LG Electronics also dropped 4.7 percent, and LG Display fell 5.3 percent on the Korean Exchange.

The two South Korean companies account for over 50 percent of the global LCD Panel market.

Overall, South Korean shares have fallen as much as five percent today following the death of North Korean leader.

The South Korean Won also fell 1.8 percent following the announcement, made this morning at 12 noon Pyongyang local time.

The sudden drop in shares stems from fears about the stability of the region following Jong-il's death; a potential consequence of the leadership transition in North Korea.

South Korean companies are not the only ones that might be affected by Jong-il's death, with Japan's Nikkei shares average also falling to a three-week low.

"The risk or fear that the death of Kim Jong-il will lead to provocation from North Korea is pressuring selling," said Hiroyuki Fukunaga, chief executive of Tokyo-based Investrust. "Right now, there's going to be a sell off as part of a risk off", he added.

Japan's finance minister Jun Azumi also expressed concern over the drop, saying that he was monitoring the financial market after the news.

He added that the news has put regional powers on edge over the potentially tumultuous leadership transfer, as the countries collapsing economy, and nuclear ambitions could pose a big threat to north-east Asia.

The Eurozone financial crisis has already been causing instability in stocks, and has been pushing down the price of commodities under the pressure.

Gold, often considered a safe asset in unsteady financial times dropped 0.7 percent this week. The Euro also fell 0.5 percent.

With credit downgrades anticipated in Europe, it's a bad time for further instability.

The U.S. Dollar on the other hand saw a rise following the news. It jumped up 0.5 percent against the Yen.

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Topics: CXO, Banking

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17 comments
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  • Globalism

    Geo-diversity of sourcing should always have been a pre-req for companies going global with their supply chains. Funny how something so obvious is overlooked until floods cut short the supply of hard drives, or governments in transition cast uncertainty on a region!

    Hana, what do you see as the real basis for fear of Jong Sun, vs. Jong Il? It's not as though Jong Il never menaced the region. I'm not sure why we should feel his son is less stable? Perhaps folks fear that the father was all bluff and the son will not be.

    All the best -- stay safe in Tokyo, and keep us posted!
    Techboy_z
    • RE: North Korean upheaval hits Asian tech markets

      @techboy_z
      I guess that in the long term it is cheaper to have just a single source and absorb losses when bad things occur from time to time. When you think about it who really cares if you cannot buy x-box or iPhone for a couple of weeks or if price rises 20% for a month. Even with all the events happening in Asia consumers have not felt anything bad when it comes to gadgets.
      Hard drives got more expensive. So what? I wanted to upgrade mine but I can wait couple months.
      paul2011
      • RE: North Korean upheaval hits Asian tech markets

        @paul2011

        Not cheaper for the customers, who the governments of the world should be trying to protect. It leads to price fluctuations like the 300% increases in some hard drive prices lately after the Thailand problems.
        Lerianis10
    • Father was all bluff and son might not be

      @techboy_z <br>I think that is the biggest reason for concern. Kim Jong-un is a twentysomething who was reportedly little known, even in North Korea, until very recently. It certainly wouldn't be the first time a young man has been anxious to prove himself to his elders.
      John L. Ries
  • Fortunately...

    ...I think N. Korea's generals understand that an effort to conquer the south would be suicidal (that and where would they buy rice?). The uncertainty is whether Kim Jong-un understands this.
    John L. Ries
    • What they understand is a little bit of saber rattling will get the western

      nations to come around bearing gifts to give them if they'll just be nice and leave everyone alone.
      baggins_z
      • Perhaps yes...perhaps no...

        @baggins_z

        First off, we really haven't heard any saber rattling yet. And we might never hear the kind of saber rattling you speak of unless North Korea goes through a relatively (by now a days standards) stable transition. I say that because we have seen that more then a few countries around the world have had some serious protests for change even without the typical unrest found in the transition of a new leader taking over.

        The fact remains that it may possibly be the case that as things progress the NK government may find maintaining its typical iron fist hold on the populace to be a little more tenuous then in the past and in order to maintain that grip without showing overt signs of problems to the world, saber rattling in the very near future may not be part of North Korea's menu. At least for awhile.

        We will see.
        Cayble
      • I hear you

        @baggins_z <br>I think we were a lot nicer to Jong-il than he deserved. Visits to Pyongyang should have been out of the question, unless reciprocated by visits to Seoul. Otherwise, Panmunjom is good enough.
        John L. Ries
    • The North Koreans do not worry about trivial things like that.

      @John L. Ries
      They do not worry about trivial things like that. They want to control! When you defeat an ideology, there are no purchase agreements to worry about. please look at what happened to Sun Yat Sung's China.
      stevmackey@gmail.com
      Mr. William Mackey
      • I'm not at all sure...

        @Mr. William Mackey <br>...that many people in the North Korean leadership are still motivated primarily by ideology (though no doubt their parents and grandparents were). I think saving one's own neck is a much bigger motivation, which bodes well for keeping the peace, but not at all well for the prosperity of ordinary North Koreans (if the leadership liberalizes, they might find end up with a bloody revolution on their hands). <br><br>What we have here looks a bit like a feudal monarchy (though a highly pathological one) with the heir of Kim Il-sung as king, the Communist Party elite as the nobility, and everybody else as ruthlessly exploited serfs. The situation is not at all tenable, but it's likely to last longer if the N. Koreans limit themselves to saber rattling, rather than substantive war.<br><br>The "where do they buy rice" line actually comes from a joke recounted in Arkady Shevchenko's "Breaking With Moscow". The story goes that Leonid Brezhnev was having a nightmare and was awakened by his wife who asked him what was the matter. He said, "I dreamed we had communized the whole world". "That's good", was the response. "But where then would we buy bread?"
        John L. Ries
  • RE: North Korean upheaval hits Asian tech markets

    Yawn..... And water is wet.... So what? The impending collapse of the European financial markets has more relevance than whether or not some autocratic tin-pot dictator is above ground or not.....
    Kia Ora IV
  • RE: North Korean upheaval hits Asian tech markets

    North Korea can't do enough long-term damage to anyone to warrant the markets acting so scared. China might back them up if attacked, but if North Korea starts the ball rolling I doubt the Chinese would abet the aggression. I think if South Korea and Japan hadn't relied so heavily on our backing them up, they'd be more confident of weathering a bit of turmoil in their own backyards.

    Who I feel bad for right now is Vladimir Putin and Dmitri Medvedev in Russia. The only frontier they have that doesn't suffer from hostile or imploding neighbors is their Arctic coast. They are in no condition to fight conflicts on three home fronts if everything goes wrong all at once. Don't be surpried to see them start warming up to us, especially if we get rid of Valerie Jarrett and her sock puppet and get a real leader elected next year.
    lgbpop
  • RE: North Korean upheaval hits Asian tech markets

    What a load of rubbish.
    Only if the country is a trading partner will it effect anyone else.
    who does North Korea trade with ?
    China.
    so suck it up and move on
    michaelaaaaaa4
    • You forget

      @michael@... <br>The DMZ is less than 30 miles from Seoul. The S. Koreans have good reason to be nervous.

      Reply to neil.postlethwaite@...

      The North Koreans would almost certainly lose if they attacked the South, but many homes, busnesses, and lives in the South would assuredly be lost in the process.

      War is only good for businesses far away from the war zone.
      John L. Ries
      • RE: North Korean upheaval hits Asian tech markets

        @John L. Ries <br>And If they cross it they will get a major ass-kicking.<br><br>Noth Korea is like Burma, slowly coming out of decades of cold-war fed dictatorship into the Global Community. Zimbabwe will be soon too, when Mugabe thankfully dies soon. Leaving only Venezuela and some of the ex-Soviet -zakstans..., and some of the brutal Arab monarchies and Religious Crazy-Fundamantaist Countries left.
        neil.postlethwaite
    • Hear, Hear

      @michael@... Typical stock market manipulators looking for any excuse to destabilize the market and rake off a quick profit.
      radleym
  • Sniff, Sniff - Stench Speculators and Traders again

    I can smell the stench of commodity traders and speculators with any excuse to cream a profit on shares and commodities going up and down - regardless of the reason.

    In reality over the last 10 years has there been any ...

    - Global Food shortages (outside drough hit Africa)
    - Commodities shortages (despite China's rampant consumption of them)
    - Oil Shortages despite Iraq war and Arab spring
    - Shortages in goods (other than iPads, PS3's, Wii's and Hard disks down to local issues./poor supply chain and production management, and perhaps a bit of whipping up demand)

    No. Just creaming off profit for no beneift other than their own. The golbal market is supposed to smooth out supply issues and provide price stability, but in reality it is a cozy cartel for those in it, at the expense of Joe Public consumer.
    neil.postlethwaite