Problematic Press Releases and the Stock Market

The jitters the Asian stock markets felt recently were from partly confirmed news items from South Korea and Japan. What gives credence to these sources is the participation of figures from no less than the United States military, who would also speak to inspire the same dubiety as the two previously mentioned Asian newsmakers.

On October 9, 2006, Seoul, South Korea reported North Korea's first-ever nuclear weapons test, successfully detonated underground - successful in the sense that it "was performed with indigenous wisdom and technology 100 percent," and that it leaked no radiation from the site. What it did was ignite a worldwide outrage and send a shockwave to rattled Asian stocks over concerns on regional security.

South Korea's KOSPI index fell 2.61%. The country's financial markets were tremendously vulnerable to a free-fall should the United States undertake any military action, large scale or even small. The SK dollar buying went from 949 of four days prior to around 963, Share prices continued to skid that Monday, October 9, and close at 1,319.40.

Benchmarks from both Honk Kong and Singapore respectively slumped 1.23% and 1.18%. The Philippine rate closed at P50.140 to a dollar that day. Sydney posted a loss of 0.43%.

Four days later, the won steadily made its way to the surface at 1,348.60 on Friday's close of KOSPI dealings. This enervation was fueled by short-term confidence of foreign investors in South Korea's "economic fundamentals," according to the chief of the country's Financial Supervisory Commission. He also knows that this confidence is most vulnerable should a protracted crisis ensue with the North. Investment decisions were mostly anchored on how the repercussions of UN sanctions against the North will be.

But is this all there is to this apprehensive, apparently news-dependent market? News items regarding this particular regional tension seems pigeon-holed with some obscure and unconfirmed details. In an article printed in The Philippine Star dating October 31, 2006, U.S. General B.B. Bell did not cite any source for a statement he made at a news conference the day before regarding the possibility of a second North Korean missile test. The South Korean newspaper Chosun Ilbo reported the alleged second testing, but would not identify its source.

The only thing it revealed was that it was a "government official." General Bell, as if stirring further fears, commented that other weapons could also be tested. More precisely, he said: "we can expect future tests as part of this program to develop these kinds of very provocative weapons."

A day before this, the Japanese Nihon Kenzai reported that the U.S. was considering deploying its most advanced defense missile system: the Patriot, which is capable of destroying ballistic and cruiser missiles - much like the ones that were allegedly launched in July 5 and mid-October by North Korea.