Hong Kong: Asian markets were mixed on Tuesday as initial concerns about regional tensions after the death of North Korea’s Kim Jong-il subsided, although European debt woes continued to drag on sentiment.
With attention turning to the leadership succession in Pyongyang, markets were relieved that there seemed to be no internal turmoil in the nuclear-armed state, providing dealers an opportunity to pick up cheap stocks.
Seoul, which tumbled 3.4% on Monday, rebounded on Tuesday to end 0.91% higher, adding 16.13 points, to 1,793.06.
Tokyo rose 0.49%, or 40.36 points, to 8,336.48 and Hong Kong ended 0.06%, or 9.99 points, higher at 18,080.20.
However, Sydney slipped in late trade and ended 0.18%, or 7.3%, lower at 4,053.1, while Shanghai shed 0.10%, or 2.31 points, to 2,215.93.
Regional markets tumbled Monday after news Kim had died, throwing into uncertainty the future of the isolated communist state, which for years has raised regional tensions with its erratic behaviour and nuclear capability.
However, analysts said that with his son Kim Jong-Un hailed in state media as the “great successor” there seemed to be some stability and likely a minimal impact on financial markets.
But in the medium-to-longer term, geopolitical risks will remain until the succession process is completed.
“If internal disputes erupt in North Korea, there may be some impact on stocks, but under current circumstances further sell-offs are unlikely,” Yumi Nishimura, senior market analyst at Daiwa Securities, told Dow Jones Newswires.
“Uncertainty over the European situation remains, which should weigh on stocks,” Nishimura said.
With the threat of a possible downgrade hanging over the eurozone, the currency bloc’s debt crisis continues to plague markets.
Standard & Poor’s is still to make a decision on whether to cut the ratings for 15 of the euro area’s members, including Germany and France, after it put them on watch before a crucial summit earlier this month.
With most analysts regarding the summit’s agreement inadequate to solve a credit crunch, there are concerns S&P will announce a downgrade, making borrowing even harder and unleashing grim prospects for the eurozone.
On Friday, Moody’s cut Belgium’s credit rating by two notches, while Fitch lowered its outlook on France’s triple-A rating to negative from stable and put six other nations on downgrade watch.
Adding to nervousness was news that plans for a €200 billion ($260 billion) boost to International Monetary Fund coffers to help troubled economies also fell short, with only euro members so far putting in and non-members, including Britain, refusing to take part.
Eurozone chief Jean-Claude Juncker said after a three-and-a-half-hour conference call between finance ministers that just 150 billion euros had been pledged.
The refusal by Mario Draghi, head of European Central Bank, to buy even more bonds -- effectively printing money so that governments can pay their debts -- has also weighed.
The ECB insists it is up to governments to put their financial house in order and not for the bank to help them out with a course of action that could easily stoke inflation. The European Union treaty “forbids monetary financing of states” by the ECB, Draghi insisted.
The euro stood at $1.3038 in Europe on Tuesday, up from $1.2996 in New York Monday, and at ¥101.53, from ¥101.37.
The dollar was at ¥77.88, slightly lower from 78.02. The South Korean won, which slumped to almost 1,200 against the dollar following the news of Kim’s death, sat at 1,161.20.
On oil markets, New York’s main contract, light sweet crude for delivery in January, gained $1.16 cents to $95.04 a barrel. Brent North Sea crude for February was up $1.21 cents to $104.85.