Asian markets and the Trump-Kim Summit

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Sat Duhra is co-manager of Janus Henderson Investors’ Asian Dividend Income strategy.

North Korea has not been a top concern among investors in Asia markets, Duhra said.

“When relations with the US deteriorated, we didn’t see markets significantly react to the threat. When there was an improvement in relations, the markets largely ignored it.

“I think the reason is because in Asia there is bit more understanding that this is about self-preservation for North Korea and that’s not something markets tend to play.”

More concerning for markets is the recent G7 meeting and the tariffs imposed and the impact on global trade. “That’s a much more significant concern for markets than what goes on at the summit.”

He noted that both leaders are unpredictable and have a reputation for saying one thing and then “having a change of heart at the last minute”. Nonetheless, he believes the summit outcome has already been decided after months of preliminary work by senior representatives of both governments.

“Whatever is going to be announced is probably already agreed so there won’t be a huge shock. We should expect something slightly positive.

“The Korean and Japan markets could have a little positive move but we don’t expect anything significant.”

Duhra’s Asian Dividend Income strategy has three Korea positions in the top ten holdings: Samsung, KB Financial and the Macquarie Korea infrastructure Fund.

“We saw a couple years back a huge reform effort in Korea and stocks have paid good dividends in financials, energy and even technology. Stocks have done well on the back of that.

“But operationally, we don’t see any change in what happens to our holdings [due to the summit].”

A positive outcome that resulted in North Korea opening would play out over several years, he added.

“We shouldn’t be excited about what goes on now in terms of the South Korean market. It takes a long time to change a country, to move the needle. Removing sanctions and developing economic ties is not even a one-year horizon.”

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