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South Korea ETF Tumbles as Trump Cancels Summit

This article was originally published on ETFTrends.com.

South Korean markets and country-specific exchange traded funds stumbled Thursday after President Donald Trump canceled a meeting with North Korea's Kim Jong Un.

On Thursday, the iShares MSCI South Korea Capped ETF (EWY) fell 1.3%, Franklin FTSE South Korea ETF (FLKR) dipped 1.2% and  First Trust South Korea AlphaDEX Fund (FKO) declined 1.4%.

Trump, citing a number of hostile statements from North Korea, withdrew from a highly anticipated summit meeting with Kim Jong Un, adding that "this missed opportuity is truly sad moment in history," the New York Times reports.

North Korea's Open Hostility

“Based on the tremendous anger and open hostility displayed in your most recent statement, I believe it is inappropriate, at this time, to have this long-planned meeting,” Trump said. “Please let this letter serve to represent that the Singapore summit, for the good of both parties, but to the detriment of the world, will not take place.”

The sudden reversal was a cause for concern among South Korean market observers as the renewed geopolitical tensions in the region could weigh on economic activity.

Trump's decision also creates a major problem for South Korea’s president, Moon Jae-in, whom orchestrated the diplomatic thaw that led to the agreement by Trump to meet. Moon remarked that the cancellation was “disconcerting and very regrettable."

“The denuclearization of the Korean Peninsula and building a permanent peace on the peninsula is a task we cannot give up or delay,” Moon said in a meeting on Thursday with his National Security Council.

Meanwhile, South Korea's central bank kept interest rates on hold for a sixth consecutive month on Thursday as widely expected among economists, the Financial Times reports.

The central bank held benchmark seven-day repurchases rate at 1.5% as forecasted by 13 analysts polled by Reuters.

“With inflation still subdued and the currency holding up reasonably well despite the recent sell-off in EM assets, there is no urgency for the central bank to hike rates just yet,” Krystal Tan, Asia Economist for Capital Economics, said ahead of the announcement.

For more information on South Korean markets, visit our South Korea category.

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