On 23rd November 2010, North Korean just shelled an Island of South Korea known as Yeonpyeong killing at least two South Korean Marines and injuring many more including civilians. This assault is the worst of its kind in decades targeting not only the military units but spilled over to civilians too.
All parties including South Korea, Japan, US, and China are on high alert mode now. Investigation and analysis is going on to determine the reason and intention of North Korea. North Korea claimed that South Korea has been continuing it's military rehearsal in the DMZ despite strong opposition from North Korea, therefore they launch this major attack as a response.
US is definitely backing the South Korea while China is the major ally of North Korea. South Korea and the US definitely does not want a war, it would not only screw the economy of South Korea which is now the major homeland of international companies. For the US, there's already two wars going on in Iraq and Afghanistan, adding another one to the list would not only cost more lives but billions or even trillions of dollar. Obama has just recently lost his majority in the House of representative, taking this war proposal to the table will not only make him even less popular but might even drag him down in the upcoming presidential election in 2012.
China would not want a war too. If a war breaks out, millions of refugee would flood into China and that is definitely the last thing China wants. However, it is of China's interest to continue supporting the North Korea regime in order to counter the US influence over the region. For China, a continuing minor tension is desirable but not a major escalation to war.
I personally don't think this incident will escalate to a major war. Everyone is trying to avoid that and hopefully this assault is just another minor one that the North Koreans have been doing since the end of the Korean War. The situation in North Korea is becoming more unpredictable in recent years as the ailing dictator Kim Jong II is shifting his power to his successor (his son) Kim Jong Un. This attack could be just a show of its military power to unite his regime.
From my analysis, if the tension were to get WORSE and a war is inevitable, it is advisable for us to do the followings:
Advice
1. If you are in some foreign country near that region get back to your own country before countries around it placed bans over their air border.
2. Get yourself a few thousand US dollar. It is still the most widely acceptable cash even in crisis mode.
3. Change your surplus currency to one of the following currencies : Swiss Fran or Singapore dollar. So far these are the two best currency to have as a safer haven.
4. If you are in stocks/shares or bonds. Sell them (wars are never good for the stock market), and get into solid commodities like Gold and silver. Unless you are a sophisticated investor or trader, you can actually take advantage of the war to make a profit. Invest in companies that deals with arms such as Victek Co Ltd (065450:KS) or get into companies that distribute food supplies.
5. If you trade futures, get into futures for gold, rice, wheat and crude oil. These are always the commodities that will gain during war times. Gold is always the safe haven for people during times of uncertainty, you can protect the value of your asset by getting into gold. Rice is the major food needed during war and disaster. Crude oil is always needed for war, countless equipment, machines and vehicles would not function without oil. Beware of a surge in petrol prices if a war takes place. (it has happened before during both first and second Gulf war)
6. Keep yourself updated to the news every day. You can visit various websites such as bloomberg, CNN, BBC, Wall street Journal, Korea times, or The Chosunilbo.
*Pictures, courtesy of Times magazine and The Chosunilbo. The author will not be responsible for any losses impaired by this article.
