We have been writing a lot these days about how crude oil is not pricing any geopolitical risk of a very messy Middle East.  See here and here.

That’s nothing, however,  compared to the performance of the South Korean stock market and currency, year-to-date,  given the geopolitical risk of the many North Korean missile tests fired off in the first seven months of 2017 (see timeline below).    The KOSPI stock index is up 21 percent and the currency has strengthened a little over 7 1/2 percent against the dollar.

Oh, by the way,  Korea also impeached and removed their president earlier this year,  had a presidential election, and has also been put on a currency manipulation monitoring list by the US Treasury.

Although Korea has not been designated as a currency manipulator, the country continues to be on the US Treasury’s watch list. The Treasury Department’s semiannual report released in April said the country hits two of the three criteria to be considered an official currency manipulator. The Treasury said it was urging Korea to increase its exchange rate flexibility and that it will be closely monitoring its currency intervention practices. – The Korea Herald

Is this the definition of  “climbing a wall of worries”,  complacency,  or just a bullet proof bull market?   We vote for capital flows seeking emerging markets.

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2017 Timeline of North Korean Missile Tests

• 2017 – North Korea test-fired a Pukguksong-2 missile over the Sea of Japan. This was the first launch of the new medium-range ballistic missile (Feb 11, 2017).
• 2017 – North Korea launches four ballistic missiles from the Tongchang-ri launch site in the northwest.  Some flew 620 mi (1,000 km) before falling into the Sea of Japan. (March 6, 2017)
• 2017 – North Korea test-fired a medium-range ballistic missile from its eastern port of Sinpo into the Sea of Japan (April 4, 2017)
• 2017 – North Korea test-fired an unidentified land-based missile from the naval base in Sinpo but it exploded almost immediately after the takeoff (April 15, 2017).
• 2017 – North Korea test-fired an unidentified missile from Pukchang airfield (April 28, 2017).  Missile, believed to be a medium-range KN-17 ballistic missile, falters and breaks apart minutes after liftoff.
• 2017 – North Korea test-fired a Hwasong-12 missile from a test site in the area of Kusong (May 13, 2017).  The missile,  later revealed to be an intermediate range ballistic missile, traveled 30 minutes, reached an altitude of more than 2,111.5 km, and flew a horizontal distance of 789 km (489 miles), before falling into the Sea of Japan.  Such a missile would have a range of at least 4,000, reaching Guam, to 6,000 km.
• 2017- North Korea test-fired another Pukguksong-2 medium-range ballistic missile from Pukchang airfield (May 21, 2017), which traveled approximately 300 miles before falling into the Sea of Japan.  The missile landed about 217 miles from North Korea’s east coast. 
• 2017 – North Korea Fired a Short Range Ballistic Missile into the Sea of Japan (May 29, 2017). It traveled 450 km.
• 2017 – North Korea fired several missiles into the Sea of Japan (June 8, 2017). They are believed to be anti-ship missiles. The South Korean military said the launches show the reclusive regime’s “precise targeting capability.”
• 2017 – North Korea tested a new rocket engine that could possibly be fitted to an intercontinental ballistic missile (June 23, 2017).
• 2017 – North Korea tested its first intercontinental ballistic missile named Hwasong-14 on July 4.  It launched from the Panghyon Aircraft Factory 8 km southeast of Panghyon Airport.  It was aimed straight up at a lofted trajectory and reached more than 2,500 km into space. It landed 37 minutes later, more than 930 km from its launch site,  into Japan’s exclusive economic zone.  Aiming long, the missile would have traveled 7,000-8,000 km or more, reaching Alaska, Hawaii, and maybe Seattle.  Its operational range would be farther, bringing a 500 kg payload to targets in most of the contiguous United States 9,700 km away.  – Wikipedia