South Korean President Moon Jae-in and his North Korean counterpart, Kim Jong Un, signed the "Panmunjom Declaration for Peace, Prosperity and Unification on the Korean Peninsula," at the demilitarized zone (DMZ), after an historic day of meetings, including a 30-minute private conversation the contents of which are unknown.
What trades are you putting on?
Non. Has nothing to do with any tradable market.
If you could do a trade it would be like buying real estate in North Korea but don’t believe anything like that is possible.
I think there are some tradable aspects. For example, wouldn't integration have an effect on South Korean companies, likely boosting profits due to a larger potential consumer base?
Yes. I have followed South Korean stocks to see if they had a discount built in for risks but I thought I heard they didn’t.
Consumer base is a very long term thing. Will not show up in profits meaningfully for 5-10 years. But could shift sentiment. Even then China might take the demand.
For most tradable instruments seems very minor for trade ideas.
DPRK's GDP per capita is somewhere around $600. Not exactly a robust consumer market, at least in the short-term.
This has been a solid short the past few sessions along with Raytheon, L3, and most of the other A&D (mainly defense) stocks. Might be a trade somewhere in the CNY/KRW pair, don't know not my market.
how about the iShares ITA? Shouldn't defense-based stocks/funds as a whole be down? But one of the things we should note is that the US isn't necessarily pulling troops out of S. Korea in the short term, as explained by Moon Jae In, so IDK.
this one yeah!
LMT down 7% since this post was made
The common sense is that something like this should be short-term positive for the equity markets (so buy KOSPI calls, sell EFA calls, maybe). There are also generally inflationary implications for the currency that should set in later. An obvious trade is short Korea sovereigns, as unification would spur government spending and thus increase the supply
Is unification in the cards right now?
That was the German playbook but not sure if it’s talked about right now. It seems like an opening up a lot more than unification.
If I were South Korea I would look to put off reunification for 20-30 years. Much different world than when the Berlin Wall fell. World is awash in excess supply do not sure if the inflationary effects would be as big. China would also have a role to play so inflation might be a lot smaller if China is shouldering a big part.
Neither country wants to unify. This will be either a ploy or denuclearization with an opening of the NK government to the world on a limited basis. Pyongyang loosened some over the past years. Reality is Kim wants to remain in power and so do all of the other countries. We just don’t want him having ICBMs.
As much as everyone wants it, Unification is not yet in the books, and probably won't be for a while IMO. There are huge differences between the North and South, and neither sides would like to cede power to the other. That being said, if this isn't all just a ploy, the two should be able to coexist peacefully for a while and after that they may work towards reunification. If they coexist peacefully w/ trade and all, I believe both sides will see benefits.
If the unification goes through, NK will probably have to (or want to) reduce some of its weapons in order to also make peace with SK allies so Norico's stock might take a hit
I'm shorting RTN, a general trend you can see is that when tensions on the Korean Peninsula rise so does RTN stock and when tensions lower the stock lowers. Since we've been hearing these peace talks the stock has looked even more unstable.
well considering the equity markets kept rallying despite NK firing dozens of big(ger) warhead tests last year, i'm not sure there's any real correlation b/t the two.
yes, geopolitical tensions can (and often do) affect the markets. but whether it's a positive or negative effect is debatable and uncertain.
much wiser to use fundamentals with a combination of technical indicators (for entry/exit points) to position your portfolio.
Long Samsung
Short the Vix.
hahahahahahahahahahahahahahahaha good one dude I've never heard anyone say short the VIX before!
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