North Korea Tests Underground Nuke, Asian Shares/Currencies Fall

Excerpt from our One-Page Annotated News Summary:

Yen, Won, Asian Stocks Slump After North Korean Nuclear Test (Bloomberg)

Summary: The Korea Central News Agency reported North Korea has, "safely and successfully conducted an underground nuclear test." Details were not provided, but this follows its July 5th failed launch of the Taepodong-2 long-range ballistic missile. In both instances North Korea went against the urging of the U.S., South Korea, Japan, China and Russia. News of the nuclear test put downward pressure on Asian currencies and equities. The yen dropped to 119.30/$1, an 8-month low, and the S. Korean won fell 1.6% for its biggest one-day drop since Dec. '04. The Morgan Stanley Capital Int'l Asia-Pacific ex-Japan Index fell 1%, while S. Korea's Kospi lost 2.4%, and the Hong Kong Hang Seng Index fell 1.3%. Stock exchanges in Japan and Taiwan were closed for a public holiday.
Related links: Full article • Additional Bloomberg coverage • Posts related to July 5th failed N. Korean launch [I, II, III] • UPI: Raytheon to Sell Patriots to S. Korea • Raytheon to Benefit from New U.S.-Japan Defense Cooperation
Potentially impacted stocks and ETFs: Aside from all the negative stock implications, Raytheon (RTN) could benefit if Japan and South Korea opt to buy more protection. The two most commonly cited Japan defense-related stocks: Mitsubishi Heavy Industries (MHVY.PK) (Tokyo: 7011) and Kawasaki Heavy Industries (KWHIY.PK) (Tokyo: 7012). ETFs impacted: iShares MSCI Pacific ex-Japan Index (EPP), iShares MSCI Hong Kong Index (EWH), iShares MSCI Japan Index (EWJ), iShares MSCI S. Korea Index (EWY), iShares MSCI Singapore Index (EWS), iShares MSCI Taiwan Index (EWT) and iShares FTSE/Xinhua China 25 (FXI). Note that mainland China-traded stocks actually gained today with the Shanghai Composite Index closing at a 5-year high.

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