The risk is on, at least according to Bloomberg: “There’s two words to describe investor sentiment in Asian markets after U.S. President Donald Trump agreed to meet North Korean leader Kim Jong Un: risk on. Equity markets across the region jumped and the yen slid after the White House accepted North Korea’s invitation for a summit that could potentially help defuse tensions along the last remaining tripwire of the Cold War. South Korea’s Kospi Index at one point was up the most since October. Japan’s Topix Index gained as much as 1.8 percent, while stock benchmarks in Hong Kong and Sydney also advanced.”
“Plans to hold a summit is a plus, though it will take time for it to lead to an actual resolution,” said Soichiro Monji, a general manager at Daiwa SB Investments Ltd. in Tokyo to Bloomberg. “The ‘Korean risk’ factor in Japanese equities will somewhat be reduced, pushing up prices,” added Monji.
The yen fell at one point most since February, writes Bloomberg, as investors turned away from safe-haven assets. Gold also declined, while the cost of insuring South Korean sovereign bonds against non-payment slumped the most since November 2016.
“Meanwhile, South Korean tourism and cosmetics stocks are surging on optimism denuclearization talks would lead to a shift in the country’s stance on its Thaad anti-missile defense system. A withdrawal of the system, which China opposes, would boost chances of a travel ban on Chinese package tours being lifted on South Korea,” added Bloomberg.