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South Korean Investors Suddenly Wake Up To Nuclear Armageddon Risks Next Door

The always efficient markets of the world had, until very recently discounted zero probability of any 'risk' for South Korean stocks. Having soared 27% in the last few months, hot money EM flows have sent KOSPI soaring, despite endless escalations in rhetoric against their neighbor; until all of a sudden, after President Trump's "fire & fury" escalation, KOSPI 'risk' just exploded...

While the 'professionals' in the credit markets have been pricing in increasing risk for South Korea for months...

It seems for much of the last year, every mention of "nuclear" armageddon was a reason to buy South Korean stocks...

Someone is wrong...

 

But suddenly, KOSPI is down 5% from its highs and the 'VIX' of the South Korean market is topping 20...

The question is - can western central banks keep their foot on the throat of global vol amid this increased risk? As the chart shows, historically, as goes KOSPI VIX, so goes S&P VIX... but we're sure this time is different.