`A Plus for Global Equities': Investors React to Korea Summit

(Bloomberg) -- As Kim Jong Un crossed the border into South Korea to hold historic talks over his nuclear weapons program, stock markets rose across Asia, while investors greeted the occasion with a mixture of caution and optimism.

One of the most common comments? It’s hard to know how this will play out.

“You can’t really tell what’s going to happen from here,” said Ayako Sera, a strategist at Sumitomo Mitsui Trust Bank Ltd. in Tokyo. “But since we’ve come this far, it also seems unlikely that things will suddenly take a turn for the worse and the talks will fall apart,” she said.

Here’s what other investors and strategists are saying:

Not Main Event

“This summit is just about creating a conciliatory mood,” said Heo Pil-Seok, chief executive officer of Midas International Asset Management Ltd. “What really matters is the outcome of the U.S.-North Korea meeting,” he said.

“There are quite a lot of people saying North Korea will make a big concession at the meeting with U.S. President Trump, such as abandoning the nuclear-weapons program, in return for receiving massive economic aid or signing a non-aggression pact with the U.S.,” Heo said. But “It’s still too early to say if the Korea discount is set to be resolved.”

A Plus for Global Stocks

“We have to look at how effective this turns out to be,” said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management Japan Ltd. “But at least we’re headed toward a resolution. To choose a side, it’s a plus for global equities, looking at where we are today.”

Good for Korean Economy

“I’m not sure about the short-term impact on markets from the summit today,” said Park Hong-Sik, chief investment officer for equities at Macquarie Investment Management Korea. But “if business with North Korea resumes, it will be positive for the Korean economy in the long term.”

Watch China

“Discussions between China and North Korea will be key for resolving this issue,” said Hyun-Su Kim, director of equity investment at IBK Asset Management.

In the meantime, investors will probably “react calmly” to the outcome of the Korea talks on Monday, Kim said.

To contact the reporters on this story: Heejin Kim in Seoul at hkim579@bloomberg.net, Min Jeong Lee in Tokyo at mlee754@bloomberg.net.

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Tom Redmond

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