Still Another Major Concern — Rising Tensions in Asia
Author: Greg Valliere
June 17, 2020
THERE’S SO MUCH HAPPENING NOW — a spike in covid-19 cases, urban unrest, the welcome surge in retail sales — that the world hasn’t focused on what the Washington Post reports in a headline this morning:”The Drums of War in Asia Grow Louder.”
SECRETARY OF STATE MIKE POMPEO is on a hastily scheduled trip to Hawaii to meet with his Chinese counterpart today. The Chinese requested the meeting, ostensibly to ease trade disputes — or will they discuss the rapidly deteriorating climate between China and India, and North Korea’s escalation of tensions with South Korea?
WHENEVER THE WORLD SEEMINGLY IGNORES North Korean dictator Kim Jong-un, he seeks attention. Sure enough, with the world focusing on the pandemic and protests, Kim has struck, blowing up a facility used by officials from the north and south, in a public relations stunt aimed distracting North Korea’s long-suffering citizens as the economy deteriorates there.
MORE IMPORTANTLY, Kim has blown up the reconciliation that South Korean President Moon Jae-in painstakingly developed in the past two years. The mercurial Kim apparently will take several provocative steps — he will redeploy troops to the border, reinstall guard posts there and resume military exercises at front-line areas. And Kim will nullify tension-easing deals reached with South Korea in 2018.
WHAT COMES NEXT? Kim obviously wants to extract concessions, but neither the U.S. nor the South will respond to blackmail. A worst-case scenario is a North Korean missile test that sends rockets into the Sea of Japan, which could raise the threat of a retaliatory strike at the North’s missile facilities. The more likely scenario is an escalation of threats and sanctions.
HOSTILITIES ALREADY ARE UNDERWAY in a remote area of the Himalayas, where Indian and Chinese troops clashed this week for the first time since 1975. Indian officials reported 20 fatalities, while claiming that the Chinese suffered at least 43 dead or wounded.
THIS DISPUTE, over land and borders in the Galwan Valley, can eventually be negotiated, most experts believe, but perhaps after more skirmishes between the two nuclear-armed powers. China seems to be the aggressor, and the Indian media is demanding retaliation.
SO WE THINK POMPEO and Yang Jiechi, China’s top diplomat, will talk about more than just trade today, as tensions rise on the Korean Peninsula and in the Himalayas. And there are other issues — the treatment of Hong Kong dissidents, skirmishes in the South China Sea, etc. The threat of a miscalculation and a flare-up has risen significantly in the entire region.
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2021 AGF Management Limited. All rights reserved.