North Korea Grabs World Attention

Come 2010, soccer fans will see 2 Koreas in action at the World's most prestigious soccer event. Both the South and North Korea qualified for the 2010 World Cup.

I would have thought that North Korea's qualification which came at the expense of Iran (I guess FIFA can only deal with 1 axis of evil at a time), would be great for their sponsors, ERKE, the subsidiary of Singapore listed China HongXing Sports Ltd, but I was wrong. Instead, since North Korea's qualification, China HongXing Sports (CHHS) has lost another 10%, bringing their month-to-date loss to about 30%. So maybe CHHS has a crap balance sheet? Wrong again. Unless the accounts have been cooked, I see net cash of 18c, compared to the current closing of 13.5c...

In the meantime, North Korea is also grabbing attention in a less desirable way. Since their missile-testing launch and nuclear testing in May, there has been increasing reports of a long-range missile test scheduled for 4 July, one capable of reaching Hawaii. US Defense Secretary, Robert Gates, subsequently ordered US military to take defensive measure. To add credibility to this, North Korea has closed its coastal waters to shipping, in view of a "military exercise" in that area.

Meanwhile, a suspicious North Korean ship has been monitored to be sailing past Shanghai. The ship is suspected of carrying illicit weapons en route to Myanmar, where the Burmese Junta is known to be supporters of North Korea's military technology. While being trailed by a US Destroyer, a high-sea interception is unlikely.

Still, with so much geo-political risk in the pipeline, one would have thought Asian markets should be trading more cautiously. But the fact remains: Asia is up 30% in 2009 (so far). Oh well, I guess the market's idea of pricing in the North Korean risk, is to hit out at their sports sponsors, CHHS, in protest of the regime's provocative manners...... And we say Mr Kim is irrational?