Growing numb to nuclear threatsOn the afternoon of Feb. 12, after Pyongyang followed through on its threats of conducting a third nuclear test, I called a friend who is an executive at a securities company. “What’s going on with the market?” I asked. “I was expecting more dramatic change.”
“It’s the learning effect,” he replied. “Remember that joke from last year about the things that only South Koreans don’t understand? The first was that only South Koreans don’t get how prosperous the country has become, and demand a leader who can make us richer every election. Second, only South Koreans don’t get how powerful Japan and China are and are always looking down on them. And third, only South Koreans don’t understand the gravity of the North Korean threat and are unfazed by missile launches and nuclear tests. The market has grown numb to all that,” he said.
On the day of the test, the KOSPI went down 5 points. As soon as the news came in at around 12:10 p.m., it dropped 10 points, but that was it. People weren’t stocking up on necessities, and the value of the won even rose. South Koreans responded calmly. The general consensus was that we just need to carry on with our lives. It was no different from any other day.
Even more amazingly, foreign investors bought more Korean stocks. What were they thinking? My friend had this to say. “Foreign investors have learned as well. Some investors are taking advantage of the North Korean risk as a trading opportunity. They want to buy when the prices are down and sell as soon as they recover. Many investors think that way, so stock prices bounce right back. Foreign investors know the Korean stock market very well, so securities companies often recommend buying.”
After the bomb went off, some companies distributed an urgent investment report that reflected my friend’s perspective. “The North Korean risks have historically remained unfavorable factors only in the short term and actually presented buying opportunities. The escalating North Korean risk needs to be taken as a good chance to buy.” The reports cite seven major North Korean risks since the first Yeonpyeong Naval Clash in 1999 to death of Kim Jong-il last year. After the risk came to light, the stock index rose by 1.48 percent after three days, 4.13 percent after 10 days and 5.39 percent after 30 days.
My friend also offered a further opinion.
“Industry insiders say the North Korean risk isn’t very lucrative compared to what we’ve learned from the global financial crisis of 2008 or the European crisis. They’re too frequent and cause less fluctuation compared to major financial crises.”
The media put intense focus on the bomb test, with news shows reporting international reactions of concern and shock. But I was reminded of the calm, peaceful faces of people in Seoul and the securities companies saying, “Time to buy.” Suddenly, it all felt so normal. Maybe I was the only one who didn’t realize how accustomed we’ve grown to the North Korean threat.
*The author is an editorial writer of the JoongAng Ilbo.
by Yi Jung-jae