The death of Dear Leader, Kim Jong-Il, has raised a whole bunch of questions about geopolitical risk in South and North Korea, sending South Korea's stocks to their lowest level in five weeks and sending the won to a two-month low. With South Korea's military on "high alert" and South Korea's President Lee Myun Bak convening a national security council meeting, stocks across Asia have fallen.
At the same time, we have upheaval in the US and Europe extending the crisis.
Nomura's Global FX Outlook 2012, as detailed by Business Insider, talks about 10 geopolitical risks that can disrupt markets in 2012. Obviously Europe and the United States are the two biggest risks but there are others, and the death of Kim Jong-Il throws in a new wild card.
Other risks include disarray in Malaysia with an election, the growing prospect of class warfare in Thailand, Vladimir Putin remaining in power, another election in Taiwan following the 2012 presidential election, Pakistani terrorists attacking India, more elections in South Korea and ongoing tensions with North Korea, the prospect of an economic hard landing in China, oil production being disrupted with disharmony in the Arab world, Congress failing to extend unemployment benefits and providing payroll tax cuts and finally a break-up of the Eurozone.
To paraphrase Better Davis, we better buckle down, it's going to be a bumpy ride.
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