ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Databases Focused on Investment Strategy

    Last 14 days

Most Popular Articles


Most Popular Commentaries

    Last Year

Most Popular Articles


Most Popular Commentaries



More by the Same Author

Region
   Asia (ex Japan, India, China)

Tensions Resurface on the Korean Peninsula

Matthews Asia

By Michael Han

November 26, 2010


 Print Page    Email Article    

Bookmark and Share

My flight took off from Seoul’s Incheon International Airport on Tuesday, 10 minutes before North Korea fired 100 rounds of artillery at South Korea’s Yeonpyeong Island in the Yellow Sea.

South Korea's military exchanged fire and deployed fighter jets while the country's President Lee Myung-bak said, “The provocation this time can be regarded as an invasion of South Korean territory." The incident is said to be the first direct attack on South Korean territory and civilians since the Korean War ended in an armistice in 1953.

North and South Korea have long had their clashes but obviously, such an attack heightens tensions and the U.S., which has condemned North Korea’s attack, has commited an aircraft carrier to the region for joint military exercises with South Korea. As such, a peaceful solution to a divided Korea seems further away than ever.

The South’s “Sunshine Policy” toward North Korea—a foreign policy adopted in 1998 to encourage greater political contact between the two nations—has clearly been abandoned. Last year, when North Korea was widely reported to have executed a North Korean senior official who was counterparty to the Sunshine Policy, I saw it as a sign that the reclusive North was giving up on attempts to open itself up. The senior official had also potentially stood to impact North Korean leader Kim Jong-il’s succession plans, leading me to feel more anxiety about the North than I had felt since childhood.

While Kim’s actions are certainly deplorable, President Lee, who has pursued a hardline approach to relations with the North since taking office, has also not been able to advance geopolitical stability. Given that a quarter of South Korea’s population lives in and around Seoul, near the contentious demilitarized zone, the alternative approach taken by Lee's predecessors may be more prudent. Prolonged tensions may greatly impact South Korea’s overall economic activity and investor sentiment.

It may seem naïve at this point to talk about the obvious advantages to both Koreas that reunification could bring—capital for the North, cheap labor for the South. Nevertheless, the fact that so much pride and anger could get in the way of a peaceful solution leads us to wonder whether we are witnessing the final throes of a dying regime in the North, and whether more reasonable minds will prevail in the long run. Until then, North Korea remains a constant thorn in the side of Asia and an irritant to regional peace—this much is clear to South Korea, Japan and the U.S. Perhaps this is also increasingly clear to China, which has thus far given the impression of being too tolerant of the North's actions.

 

 

You should consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds carefully before making an investment decision. This and other information about the Funds is contained in the prospectus, which may also be obtained by calling 800.789.ASIA (2742). Please read the prospectus carefully before you invest or send money as it explains the risks associated with investing in international markets. These include risks related to social and political instability, market illiquidity and currency volatility. Investing in foreign securities may involve certain additional risks, exchange rate fluctuations, less liquidity, greater volatility and less regulation. Single-country and sector funds may be subject to a higher degree of market risk than diversified funds because of a concentration in a specific sector or geographic region.

The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews does not accept any liability for losses either direct or consequential caused by the use of this information.

Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies.

Matthews Asia Funds are distributed by BNY Mellon Distributors Inc.

 

© 2010 Matthews International Capital Management, LLC

www.matthewsasia.com

 

 

 

 

 

 

 


 

Print Page    Email Article
 
Remember, if you have a question or comment, send it to .
Website by the Boston Web Company