Markets fall on news of Kim Jong Il's death
By Peter Shadbolt, CNN
updated 1:00 AM EST, Mon December 19, 2011
The North Korean flag flies at half-mast above the North Korean embassy in Beijing on December 19, 2011.
STORY HIGHLIGHTS
- Death of North Korean leader rattles markets across the region
- South Korea's Kospi index slides almost 5% at the open
- Markets from Australia to Japan also sink on the news
- Concerns grow over succession struggle in North Korea
Hong Kong (CNN) -- Shares in Asia slumped on Monday on fears the death of North Korean leader Kim Jong Il could lead to instability on the divided Korean peninsular.
South Korea's Kospi Index fell 4.9% to 1,750.60 in mid-morning trading in Seoul before climbing slightly to 1,766,82 to be 4% off by midday.
Key stocks tumbled, with Samsung Electronics, the largest stock on the Kospi, falling 3.5% and LG Display, the world's second largest panel maker, down 7.2% in early trading.
Already battered by fears that possible credit downgrades in European countries could derail a solution to the euro zone debt crisis, Asian markets fell across the board.
Enigmatic North Korean leader Kim Jong Il dies at the age of 69
Asian markets dip after Kim's death
At the open, Japan's Nikkei 225 index was down 1.1 % at 8,304.47, Hong Kong's Hang Seng slid 2.5%t to 17,833.42 and the Shanghai Composite Index fell 2.6% to 2,167.68.
June Park, senior economist at Meritz Securities, told Reuters.com the death of Kim Jong Il had rattled investor confidence.
"This is definitely negative factor for markets with no detailed information on his death. It will drive the stock markets lower and the Korean won to depreciate sharply as geopolitical risks are rising and foreign investors could withdraw money out of South Korea," she said.
With South Korea's military on "high alert" and South Korea's President Lee Myun Bak convening a national security council meeting, Markets in Taiwan, the prospect of further instability caused by succession problems in North Korea also weighed on markets across the region.
Markets in Taiwan, Singapore, Australia, New Zealand and Indonesia also fell.
Chung Young-Tae of the Korea Institute of National Unification was quoted by Reuters.com as saying that while the death was not unexpected, what happens next will be "very important."
While Kim's son, Kim Jong Un, is widely believed to have been groomed as a successor, no official announcement has been made.
"Kim Jong-un is not yet the official heir, but the regime will move in the direction of Kim Jong-un taking center stage," he said. "There is a big possibility that a power struggle may happen.
"It's likely the military will support Kim Jong-un," he added.
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