North Korean leader Kim Jong Un ordered his army to prepare for war after an exchange of fire with South Korea yesterday, ratcheting up the rhetoric as the latest skirmish between the two nations intensifies.
Kim declared a “semi-state of war” along the border and ordered his troops to be combat ready from 5 p.m. local time, North Korea’s official Korean Central News Agency said Friday. Yesterday, Kim gave South Korea 48 hours to stop broadcasting propaganda across the demilitarized zone or face further attacks. Stocks fell the most since 2012.
The incident is one of the most serious since Kim Jong Un became supreme leader 3 1/2 years ago and began consolidating power through a series of purges and provocations against the South. The uneasy truce between the two Koreas has been periodically disrupted by exchanges of fire that peter out before they turn into anything more serious. Still, Pyongyang’s unpredictable nature keeps tensions high.
“It’s a war of rhetoric from now on,” Lee Ji Sue, a professor of North Korean studies at Seoul’s Myongji University, said by phone. “North Korea has almost never retaliated back and will raise tensions until it feels it’s consolidated its internal controls enough.”The threat came after the North fired shells into South Korean territory, prompting the South to respond with a barrage of artillery. The North denied firing on the South Thursday. South Korea put its military on high alert and President Park Geun Hye canceled her public engagements to focus on the crisis.
Defense Stocks
The benchmark Kospi index fell as much as 3 percent and was recently down 1.6 percent at 1883.35, in line with other Asian markets. Romanson Co. and Shinwon Corp., which all do business in the Gaeseong industrial complex jointly run by the two Koreas, fell as much as 8.2 percent and 9.5 percent before recovering losses. Among defense-related stocks, Speco Co., a maker of products such as water jets, rose 20 percent while electronics warfare equipment maker Victek jumped 22 percent.
South Korea is monitoring markets and is prepared to take action to offset any turmoil caused by the North Korean situation, Vice Finance Minister Joo Hyung Hwan told reporters Friday. Policy makers are also watching for risks stemming from U.S. monetary policy and China’s slowdown, he said.
The Bank of Korea held a meeting to discuss the impact of North Korea’s actions, Park Sung Joon, a press official, said by phone.
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