North Korea hydrogen bomb test weighs on Asian stocks

“This North Korea news is not good for the market,” a Bank of Korea official said

North Korea’s unexpected announcement that it has tested a hydrogen bomb has weighed on Asian markets towards the close.

South Korea’s Kospi index slipped lower on the announcement to close down 0.3 per cent at 1925 points, while the value of the won was down 0.7 per cent against the dollar.

Japan’s Nikkei index was down 1 per cent at 18,191 points. The Australian S&P/ASX 200 was also down by more than 1 per cent at 5,123 points.

“This North Korea news is not good for the market,” a Bank of Korea official said. He added that investors had been betting against the Korean won since the start of the year.

The official added that previous nuclear tests had not weighed on the market for long. “When we consider previous cases we don’t feel this will have a sustained influence on markets,” he said.

Chinese stocks edged higher despite the news as investors responded to hopes that authorities could extend the ban on share sales by major shareholders that was implemented after severe losses in the summer.

Some analysts spoke against delays in removing the restrictions. "It's like the sword of the Damocles, always hanging over your head. The best way is to remove restrictions altogether,” said Shen Weizheng, fund manager at Shanghai-based Ivy Capital.

The Shanghai Composite, China’s benchmark index, closed up 2.25 per cent at 3,362 points.

Additional reporting by Reuters