Positive developments from the Korean Peninsula will be good news for stocks in the region — and a couple markets in particular, according to a bank strategist on Monday.
U.S. President Donald Trump and North Korean leader Kim Jong Un have both indicated their willingness for a summit. Sean Yokota, head of Asia strategy at Nordic bank SEB, said he believes that geopolitical tensions will ease in the months ahead.
Speaking to CNBC’s “Capital Connection,” he said: “In the next one to two months, when Trump is coming here, I think geopolitical tensions are low, economic activity’s picking up … so that’s usually positive for equity markets.”
Yokota said markets in Korea have yet to price in the positive news.
“I think very little is priced into actually good news coming out of North Korea, South Korea, so that could be an extra stimulus to Kospi going up,” he said, referring to the country’s key stock index.
Trump and Kim are expected to have a landmark meeting in the coming weeks, with the U.S. president declaring that he wants to “get peace.” Likely locations are said to be either in Mongolia, Singapore, or the demilitarized zone between North and South Korea.
Kim and South Korean President Moon Jae-In met in April and pledged to push for complete denuclearization of the Korean Peninsula. There are widespread doubts that North Korea will ever give up its nuclear weapons, however.