I’m writing to you now from the Trump-Kim summit media centre, which is a few kilometres away from the venue of the meeting on the island of Sentosa. The media centre is a large room (see photo below) with a higher monitor-person ratio than even the most hyper-connected sports bar. It’s packed with busy-looking journalists alternately glaring at their laptops and gazing at the monitors.
There are a lot of TV journalists talking into video cameras – seemingly oblivious to the layers of irony of reporting, for television, on an event that they were viewing on television themselves, with the backdrop of lots of other people who were doing the same thing. And though the media centre happens to be in Singapore, and close to the actual site of the summit, it could just as easily be in (say) Bangkok or Miami or Buenos Aires – where the quality of the transmission from Sentosa, and the sense of immediacy, would be just as good.
1. We’ve been here before
By my amateur count, North Korea has indicated – with varying degrees of forcefulness and depth – around half a dozen times over the past 35 years that it was prepared to move forward with denuclearisation. (See the handy timeline here.)
None of them have stuck. And… here we are again, with North Korea suggesting the same thing again.
Relationships move in cycles, and the way that the U.S. and North Korea get along is no different (as I wrote here). Both leaders have domestic constituencies to cater to. Right now it makes sense for both of them to talk. But that dynamic can change very quickly – as it has before.
Why would this time be any different? I don’t know why it would be. There will be a lot of talk. But a real deal that sticks? Highly unlikely.
…Because it could turn every $50
you invest into $2,000 or more.
2. There’s no “there” in the agreement
The agreement signed by the two heads of state crumbles under the pressure of even the slightest hype.
The main points of the signed agreement (as summarised by the Straits Times of Singapore) – all 1.5 pages of it – are as follows…
1. US and North Korea commit to establish new US-DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity.
2. The two countries will join their efforts to build a lasting and stable peace regime on the Korean Peninsula.
3. Reaffirming the April 27, 2018 Panmunjom Declaration, North Korea commits to work towards the complete denuclearisation of the Korean Peninsula.
4. US and North Korea commit to recovering remains of prisoners of war including the immediate repatriation of those already identified.
First… contrary to what the media might have you think, Trump and Kim did not toil over a legal pad all morning to come up with the agreement they signed. The agreement was developed (most likely with a heavy assist from South Korea) before the two shook hands. The two may have discussed it, but their conversation had nothing to do with what was signed.
Why? There hasn’t been much time for the two sets of bureaucracies to hammer out anything substantive. Also, the deal had to be approved at many levels of government – in not just one government, but two governments. So it’s not surprising that it’s vague and doesn’t say much.
I put together a short video yesterday… where I talk about the prospects for a deal. You can see it here…
0:00 In the belly of the media beast… at the DPRK-USA Singapore Summit International Media Centre… a cross between a gambling house and a sports bar…
0:41 Outside the media centre… the skyline, and how (and from where) TV talking heads broadcast
1:52 The one reason why no real deal will be signed between North Korea and the U.S.
3. Investors aren’t convinced
Last summer, I suggested that it made sense to invest in South Korea’s stock market, thanks to a positive macroeconomic outlook; a lot of space for the market to catch up with others; and low valuations. And that was despite a lot of domestic political headwinds.
Since then, South Korea’s stock market is up 47 percent (compared to a rise of 67 percent in the MSCI World). At a P/E of 11.8, it’s still one of the world’s cheapest markets.
But it doesn’t look like investors are anticipating a dramatic change in South Korea’s economy or markets. Recently I wrote about the huge investment gains that can come about from a big structural change in a market. And if investors (who by no means are all-knowing, of course) were anticipating such an evolution.
Jim Rogers’ thoughts on investing in Korea
Jim Rogers recently told me that he’s excited about investing in North Korea. Jim said he didn’t have many ideas about how to invest in the theme of North Korea coming in from the cold, but said that he had invested in Korean Air Lines (Korea Exchange; ticker: 003490). The shares, which are listed in Seoul, were up 4.9 percent yesterday, and are down 2.4 percent over the past month, and 12 percent over the past year.
Jim also said that he had invested in a South Korean ETF (such as the iShares MSCI South Korea ETF (NYSE; ticker: EWY), or Lyxor MSCI Korea UCITS ETF (Singapore; ticker: KRW), or Xtrackers MSCI Korea UCITS ETF (Hong Kong; ticker: 2848). The NYSE-listed ETF is down 1.6 percent over the past month, and up 13 percent over the past year.
This emerging tech market is forecast to rocket up by potentially as much as 2,000% in the coming years.
That gives you a small window of opportunity to potentially profit from what some are calling:
And… a note on my (very popular just now) name
Yes, my first name is Kim. When I’m with someone with Asian features, people generally assume that he’s Kim. (Other times I’m greeted with a slightly incredulous, “Are you Kim?” when someone can’t wrap his head around a white person, and white guy at that, named Kim). And the tendency in the west is that Kim is a woman – and not me. In my several decades of meeting people, I’ve met just a handful of males with the first name of Kim.
However (as people who I meet from Korea never tire of telling me), Kim is a very common family name in Korea, where the family name comes first, followed by the given name. Around 20 percent of the population of South Korea has the family name of Kim. By comparison, the three most common last names in the U.S. – Smith, Johnson and Williams – together account for only around 2 percent of the total last names in the country.
So I have a lot of latent fast friends in Korea, even if it’s just our first names, and not family names, that we share. (I have yet to meet someone named Kim Kim – that is, with the word as both first and last name).
Publisher, Stansberry Churchouse Research
P.S. Over the past 25 years, I’ve lived and travelled all over the world in search of investment opportunities… and I write most about investing around the globe in a supplemental e-letter, Kim’s Global Insider. I talk a lot more about global investment themes… markets around the world… where, and how, to invest internationally… what I see in Asia from Singapore (where I live)… and my boots-on-the-ground travels.
I invite you to join me on my profit-making journey around the world.
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