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The view from the market on Kim Jong Un

Prospect of further escalation supports defensive stance on South Korean assets

| North Korea

For the first time since Kim Jong Un took over leadership of his hermit North Korean kingdom five years ago, investors in the South are finally showing signs of worry.

The alarm, which saw the benchmark Kospi index fall 3.2% during the week of Aug. 7, started with U.S. President Donald Trump's outburst that the world can expect "fire and fury" if North Korea continues to threaten his country. Trump raised the rhetoric a few days later by declaring, "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely." Pyongyang responded by announcing a plan to fire missiles toward Guam, a Pacific island territory of the U.S. home to two important military bases.

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