Trump says North Korea potential is ‘awesome’; Morgan Stanley says it could attract $9 billion per year

FAN Editor
U.S. President Donald Trump arrives at Noi Bai Airport for the US-DPRK summit in Hanoi
U.S. President Donald Trump arrives at Noi Bai Airport for the US-DPRK summit in Hanoi, Vietnam February 26, 2019. REUTERS/Kham/Pool

February 27, 2019

(Reuters) –

0240 GMT: TRUMP SEES AWESOME POTENTIAL FOR NORTH KOREA

U.S. President Donald Trump said in a Twitter message hours before a summit with Kim Jong Un that North Korea had “awesome” potential to thrive if it would denuclearize.

Trump is to meet Kim at the French-colonial-era Metropole Hotel in Hanoi at 6:30 p.m. (1130 GMT) and have a 20-minute one-on-one conversation before a dinner scheduled to last just over an hour and a half. Both arrived in the Vietnamese capital on Tuesday.

“Vietnam is thriving like few places on earth. North Korea would be the same, and very quickly, if it would denuclearize,” Trump said.

“A great opportunity, like almost none other in history, for my friend Kim Jong Un. We will know fairly soon.”

(U.S. President Donald Trump shakes hands with Vietnamese President Nguyen Phu Trong during their meeting at the Presidential Palace in Hanoi, Vietnam – https://tmsnrt.rs/2EzCLIC)

Morgan Stanley said it estimated the opening up of North Korea’s economy, assuming a gradual Vietnam-style liberalization, could bring investment opportunities of up to $9 billion per year and incremental consumption opportunities of $2 billion per year.

“North Korea’s 18 million working age population would join Asia’s production supply chain at an hourly wage cost lower than Vietnam’s,” the bank said in a research note. “A liberalized North Korea would provide the missing link in improving the trade connectivity of the Korean peninsula to Europe if inter-Korea rail connects to Russia and China.”

0212 GMT: EXPERTS URGE CAUTION ON PEACE DEAL

Analysts however cautioned that a peace deal between the two sides would not end the North’s pursuit of nuclear weapons.

Officials and experts have said the two leaders are likely to sign a peace declaration to symbolically end the 1950-53 Korean War. Other agreements could be to open liaison offices in each other’s countries and adopting denuclearization measures, such as allowing inspectors to observe the dismantlement of North Korea’s Yongbyon nuclear reactor, in exchange for a loosening of U.S. economic sanctions against Pyongyang.

The London-based International Institute for Strategic Studies said a peace deal needed to be carefully worked out, otherwise it could lead to regional security risks. “Peace between Washington and Pyongyang might contribute to an untimely withdrawal of U.S. forces from South Korea, encouraging dangerous misconceptions in Pyongyang,” it said.

Daniel Russel, the top U.S. diplomat for Asia until 2017, said: “A peace treaty that leaves in place the arsenal of North Korean chemical, biological, and nuclear weapons that directly threaten Americans and our allies is not much of a peace treaty.

“The path to real peace on the Korean Peninsula begins with irreversible steps by North Korea to eliminate its nuclear weapons program.”

0215 GMT: MARKETS QUIET BUT MAY REACT POSITIVELY

Singapore’s DBS said news about details of denuclearization and the possible easing of North Korea sanctions would be taken positively by markets.

Nomura analyst Chetan Seth said in a note: “If we somehow see some progress towards denuclearization of the Korean Peninsula, this could be another positive catalyst for Asian equities, particularly Korea.”

However, Nick Twidale, Sydney-based analyst at Rakuten Securities Australia, said although the summit is expected to be positive with regard to denuclearization, “little is expected in terms of market moving updates”.

(Graphic: Markets vs North Korea’s provocations – https://tmsnrt.rs/2BWJQkN)

0220 GMT: SUMMIT VENUE HOSTED CHAPLIN ON HIS HONEYMOON

Trump and Kim will meet on Wednesday at a storied French colonial-era hotel once used by the North Vietnamese government to house foreign guests during the Vietnam War.

The Sofitel Legend Metropole Hanoi has hosted dignitaries and celebrities from Charlie Chaplin on his honeymoon in 1936 to “Hanoi Jane” Fonda during her 1970s anti-war campaign and even Trump himself on a recent visit to the Vietnamese capital.

Angelina Jolie and Brad Pitt stayed in the 118-year-old hotel in 2007. The Metropole also hosted Graham Greene, who wrote part of his seminal 1955 work, “The Quiet American” there, and numerous war correspondents during the 20-year-long Vietnam War that ended in 1975.

(The Metropole hotel is seen ahead of the North Korea-U.S. summit in Hanoi, Vietnam – https://tmsnrt.rs/2VmjrnF)

(To see an interactive graphic on inter-Korean relations, click https://tmsnrt.rs/2KdXMcS)

Live: North Korea – Reuters social media blog https://www.reuters.com/live/north-korea

(Hanoi newsroom, Vidya Ranganathan, Swati Pandey, David Brunnstrom, Karishma Singh, Raju Gopalakrishnan)

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