JAKARTA (TheInsiderStories) – North and South Korea are inching closer to peace, after the two nation leaders Kim Jong Un and Moon Jae-in shake hands on the southern side of the demilitarized zone after meeting, Friday (27/4).
South Korea’s Kospi SEU, rose more than 1 per cent soon after the opening bell there, but was up only 0.5 per cent by early afternoon.
Meanwhile, the Jakarta Composite Index now rests just above the 5,900-point plateau although it’s overdue for support on Friday. Indonesia stock market has finished lower in five straight sessions, plummeting more than 440 points or 6.1 percent along the way.
The region’s major bourses were all in positive territory in early trading with the Hang Seng in Hong Kong the best performer, up 0.8 per cent as energy stocks jumped 3.1 per cent and technology stocks added 1.5 per cent.
The S&P/ASX 200 index in Sydney rose 0.3 per cent with only the financial segment in falling.
The summit between Kim Jong Un and Moon Jae-in is a good step forward and could determine the future of relations on the Korean Peninsula and lay the groundwork of the reconciliation after 60 years of dispute.
North Korea’s goals are clear. Kim Jong Un says he is committed to the path of denuclearization, but some observers doubt he will ultimately give up his nuclear weapons. In the past, North Korea has sought security guarantees and demanded the US drop what the North describes as its “hostile policy.”
South Korea is also pushing for North Korea to dismantle its nuclear program, and it’s one of the top issues on the agenda for today’s summit, along with establishing a permanent peace on the Korean Peninsula (the Korean War ended in stalemate in 1953 with a truce) and advancing inter-Korean relations.
If the two countries can reconcile their relationship in politic and economy, this could be the new pile of power in Asian economy landscape amidst the China-U.S trade war.
South Korea’s economy is an export powerhouse, specializing in products such as semiconductors, smartphones and cars. The majority of North Korea’s exports of coal and other natural resources go to its neighbors, China and Russia.
The Asian Development Bank (ADB) estimated 6.0 per cent Asian growth in 2018 from 5.8 per cent last year, citing solid export demand, but said US protectionist measures and any retaliation against them could undermine trade.
Another risk to Asia’s growth, the ADB said, is “diminishing capital inflows if the US Federal Reserve needs to raise interest rates faster than markets expect”.
The Fed last raised rates in March and policymakers signalled two or three more hikes this year.
The ADB now expects China’s economy to grow 6.6 per cent this year, faster than the bank’s prior estimate of 6.4 per cent made in December, and by 6.4 per cent in 2019.