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| Situation Update No. 7 Ref.no.: EX-20100326-25463-KOR
Situation Update No. 7
On 2010-03-29 at 03:21:19 [UTC]
Event: Explosion
Location: South Korea West Sea Baengnyeong Island area Number of Missing: 46 person(s)
Number of Evacuated: 58 person(s)
Situation: Domestic financial markets are unlikely to be much affected by the mysterious sinking of a naval patrol ship near the western sea border with North Korea on Friday, officials said Sunday. Although initial media reports suggested North Korea's involvement in the sinking of the 1,200-ton patrol ship Cheonan in the Yellow Sea, the government has been reluctant to link the North to the disaster. Government officials in Seoul said the exact cause of the sinking could be determined only after the sunken ship is salvaged about one month later. "In the past, our financial markets showed resilience of returning to normal, even after they were affected for one or two days by news the North conducted nuclear tests or launched missiles," a finance ministry official said, requesting anonymity. "We believe that the naval disaster will not have much impact either this time but we need to wait until investigation results about the cause of accident come out," he added. North Korea-related risks are a major reason for what is called the "Korea discount" in local financial markets as foreign investors worry that soured inter-Korean relations could affect their investment here. Even after the North's long-range missile test on April 5 last year, the local stock market ended higher the following day. On May 25 of the same year, the communist country conducted a nuclear test, sending South Korea's benchmark index sharply lower but it managed to recoup most of the losses during the day, inching down only 0.2 percent. "If it turns out that the North was not involved, the naval disaster will not affect our financial markets and economic conditions much," another finance ministry official said. "You can say that the disaster will not increase downside risks on economic conditions at this moment." The government still noted that it will closely watch future developments to brace for any market shocks until the exact cause of the incident is confirmed. |  | | | |
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