Instant View: North Korea artillery hits South Korea island

SEOUL Tue Nov 23, 2010 3:56am EST

SEOUL (Reuters) - North Korea on Tuesday fired dozens of artillery shells at a South Korean island, setting buildings on fire and prompting a return of fire by the South, Seoul's military and media reports said.

Following are initial reactions from North Korean experts and market analysts.

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NORIYUKI SHIKATA, SPOKESMAN, JAPANESE PRIME MINISTER'S OFFICE

"We have set up an information-gathering team on the North Korean shelling at the crisis management center within the prime minister's office and are checking on the facts in cooperation with related ministries.

PARK YOUNG-HO, DR, KOREA INSTITUTE FOR NATIONAL UNIFICATION

"Although I can't be certain of the rationale behind North Korea's attacks yet, I see it as North Korea's intention to turn this region into a conflict zone so that it can bring the concerned parties to the discussion table.

"By showing that it has nuclear capacity and by firing artillery shells today, I think it is trying to make a point that it is militarily capable and thus should not be lightly regarded. Ultimately, I think it is strategically seeking to tilt talks concerning the contested Northern Limit Line and the peace treaty toward its advantage."

ZHU FENG, PROFESSOR, PEKING UNIVERSITY

"It's unbelievable. Today's news proves that North Korea, under unprovoked conditions, shot these South Korean island.

"It's reckless provocation. They want to make a big bang and force the negotiations back into their favor. It's the oldest trick.

"From the Chinese perspective, they'll be aware of how this North Korean escalation will go. If it's North Korea's responsibility, Beijing will condemn the act...as one that is against peace and stability."

KIM KEUN-SIK, PROFESSOR, KYUNGNAM UNIVERSITY

"This seems to be a highest-level military provocation. On one hand, North Korea has a uranium enrichment card to bring the United States to the negotiation table. On the other hand, by raising tensions in the West Sea, North Korea wants to threaten South Korea.

"I don't think, (the reason for the artillery shelling) is a simple protest against the South Korean military drill. It must have been beyond that."

LEE DONG-BOK, SENIOR ASSOCIATE AT CSIS

"North Korea's shelling is probably related to its recent revealing of its uranium enrichment program. It is likely that they are making a strong attempt to shake the U.S. and South Korea so that they will make some concessions."

MARK PERVAN, SENIOR COMMODITIES ANALYST AT ANZ IN MELBOURNE

"This is a trigger for the 'risk off' button. You'll certainly see selling in risk-based markets like equities and commodities until we get a better read on events.

"There should be reasonable support for gold although we often see a firmer dollar as the initial reaction to risk and lower gold prices, but industrial metals might get hit. Oil too."

HWANG KEUM-DAN, MARKET ANALYST, SAMSUNG SECURITIES

"The stock market will inevitably open lower as today's act of aggression is unlike others that have taken toward South Korea. The fact that a residential area was fired upon, potentially injuring civilians, is alarming.

"However, I do not necessarily think this will prompt a lasting market decline. The market will do poorly in the short-term, given the gravity of this issue -- this is worse than missile firing but less serious than nuclear testing. The main KOSPI index's 60-day moving average, around 1,870, will probably be maintained."

LEE JAE-MAN, ANALYST, TONG YANG SECURITIES

"The North's provocation historically sent shockwaves to the stock market, which has subsequently returned to normal.

The latest incident may pose more risk as some South Koreans were reportedly injured by the North's fire.

It will inevitably affect the local stock market especially as it comes as foreigner buying is slowing and geographical risks are mounting."

CHUNG SEUNG-JAE, MARKET ANALYST, MIRAE ASSET SECURITIES

"The news came at a time when market sentiment was already weakened by European debt and Chinese tightening concerns. And combined, stock market will do poorly tomorrow. Artillery firing on residential area was unlike its other acts of aggression. And this is alarming."

JEONG MY-YOUNG, FX STRATEGIST, SAMSUNG FUTURES

"The incident prompted investors to close dollar short-positions against all currencies. This kind of incident can trigger automatic stop-loss selling of non-dollar currencies. That may put pressure on emerging Asian currencies, which have enjoyed strong gains so far this year."

(Reporting by Chisa Fujioka in Tokyo, Nick Trevethan in Singapore, Yeojung Chang, Hyunjoo Jin, Park Jungyoun, Moon Dan-bee, Ju-min Park and Cheon Jong-woo in Seoul; Editing by Sanjeev Miglani, Ken Wills and Chris Lewis)

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