A successful end of the US-North Korea talks tomorrow at 1:00 GMT can boost Chinese stocks and stock markets in the US, according to a background study on financial market developments in past events over North Korea.
A negative result from the meeting of the two leaders could harm European stocks, according to the analysis.
President Donald Trump will hold a historic meeting with North Korean leader Kim Jong-un in Singapore. It is not certain whether leaders can agree on issues such as the immediate withdrawal of nuclear weapons and the alleviation of sanctions.
If the two leaders come close to a resolution, Chinese stocks are likely to benefit the most, according to the Kensho analysis, a quantitative tool used by hedge funds.
IShares China ETF (FXI) futures rose 0.9% on average on the two trading days after negotiations between North and South Korean leaders showed improved relations. The study looks at 19 cases since Kim took office at the end of 2011.
FXI tracks companies like Tencent, Bank of China, PetroChina and Air China, a state-owned carrier that resumed flights between Beijing and Pyongyang earlier this month. Most of the trade with North Korea is with China, which supplies most of the country's oil.
The S & P 500 rises by 0.2% on average, according to Kensho. The Cboe Variability Index (VIX), a measure of fear, declined by an average of 3% at a similar event.
When concerns over North Korea's nuclear threat increase, European and emerging markets are among the losers according to this quantitative analysis.
South Korean stocks are down 0.3 percent and iShares MSCI Japan ETF (EWJ) declines on average about a quarter of a quarter when tensions around North Korea are rising, according to Kensho's analysis.
Read more:
25 Canada Square, Level 33, office 50, Canary Wharf London, E14 5LQ +44 20 3608 6256
World Financial Markets - 0700 17 600 Varchev Exchange - 0700 115 44
Varchev Finance Ltd is registered in the FCA (FINANCIAL CONDUCT AUTHORITY) with a passport in the United Kingdom: FCA, United Kingdom - registration number: 494 045, which allows provision of financial services in the United Kingdom.
Varchev Finance Ltd strictly comply with the statutes of the European directive MiFID (Markets in Financial Instruments). targeting increased efficiency, transparency and uniformity of financial instruments.
Varchev Finance Ltd is authorized and regulated by the Financial Supervision Commission - Sofia, Bulgaria: License number RG-03-02-05 / 15.03.2006
The information on this site is not intended for distribution or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
Disclaimer:
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63,41% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.