I would expect investors to be wondering if the very real negative outcome of the G7 economic summit and the sham positive outcome of the Kim/Trump summit will have any impact on investment markets.
The lightweight answer is that as usual short term reactions are not connected with logic, economics or reality. Asian markets reportedly went up because the developments in North Korea are ‘positive’, when in fact nothing will change that influences the climate for business in the Far East. Developed markets, the larger company elements of which are highly dependant on global trade, are treating a potentially serious interference factor in the global trade mechanisms as if it just won’t happen.
As I have commented before, trade tariffs, embargos and sanctions have very unpredictable results because of the complexity of world trade. If you put petrol in your diesel car, nothing happens to start with. I know this, because I have done it twice! 
But later on the car reacts and in the end, if you don’t clean out the diesel immediately, you will have a non-functioning engine and at least a damaged diesel injector pump that is very expensive to repair.
I think the lack of impact on global markets of the break down in the free trade consensus may be just as dangerous, even if nothing happens straight away.
As for North Korea – well it may be an exploitation opportunity for a few mainly US corporates at some future date, but I can think of many more interesting investment stories.
You must be logged in to post a comment.