While there is still little conviction that all these will escalate into a full blown military response, the relentless show of defiance from North Korean leader Kim Jong Un is increasingly seen as a game of dare on its allies China and Russia. Investors are expected to brace for more volatilities ahead. The CNY may continue to outperform against its trade weighted basket, with stability a key policy priority in the run up to its 19th National Peoples’ Congress on October 18th.

Talking points

• Geopolitical tension has risen visibly, as North Korea decided to up the provocations with its successive missile launches and also underground nuclear tests.
• China’s patience is being tested, while US President Trump has been firing verbal responses initially targeted at Pyongyang, China and then extended to all who trades with Pyongyang.
• CNY plays up its role as an anchor of stability, while the KRW looks more vulnerabl

For full analysis, please download the report: Essential Asia: Take cover from the Pyongyang tantrum (PDF, 700KB)