Why are investors so relaxed about the tensions in Korea?


Gulf Business Expert 316c56dd082a4e13e7c4fc9ac497adae Why are investors so relaxed about the tensions in Korea? News Of The Economy  Dubai development company America ABU DHABI

A ROGUE state has tested what may be a hydrogen bomb and has sent a missile over the territory of a neighbouring country.

The American president has promised “fire and fury” if threats continue. The Security Council of the United Nations has been locked in debate. This sounds like the plot of a Hollywood thriller or a paperback potboiler in which the world is heading for conflagration.

But international investors are not thrilled, and seem barely disconcerted, by the crisis on the Korean peninsula. Gold has risen a bit, the yield on Treasury bonds has dropped and the MSCI World equity index has fallen since the start of August. However, the moves have not been huge. Even the South Korean stockmarket, surely the most sensitive gauge of war risk, is well above its level at the start of the year.

What explains this remarkable insouciance? One possibility is that the markets may simply not be very good at assessing political risk.