Asian stocks dropped yesterday after North Korea said it had carried out a nuclear weapons test. Samsung Electronics Co and China Mobile Ltd led the decliners.
"North Korea is making its neighbors very nervous," said Yang Jeung Won, who oversees about US$2.1 billion as chief investment officer at Samsung Investment Trust Management Co. in Seoul. "Investors could take the news as a chance to exit."
Airlines including Korean Air Lines Co slumped on concern political instability will deter travel in the region and as oil prices rose in New York. The South Korean government raised its military alert level, as North Korea's actions were condemned internationally.
The nuclear test prompted a sell-off in regional stock markets. Hong Kong's Hang Seng Index lost 1.1 percent, while Singapore's Straits Times Index dropped 1.4 percent, set for the biggest decline in almost three months.
Markets in Japan and Taiwan were closed yesterday for holidays.
China's stocks rose in the first day of trading after a weeklong holiday.
Markets fell elsewhere in the region, except in New Zealand, Pakistan and Sri Lanka.
Samsung Electronics, South Korea's largest exporter, dropped 0.9 percent to 642,000 won (US$676). China Mobile, the world's largest cellphone operator by market value, declined 2.4 percent to HK$56.15 (US$7.20).
Both the Japanese yen and the South Korean won were hit hard.
The yen fell to an eight-month low of 119.30 per US dollar, from 118.83 before North Korea's government-controlled news agency reported the test.
The won had its biggest drop since Dec. 8, 2004, slumping 1.6 percent to 963.90 at the 3pm close of local trading, according to Seoul Money Brokerage Services Ltd.
South Korea's central bank said it would take measures if needed to keep the financial markets stable.
The Bank of Korea said in a statement the measures would include additional supply of liquidity into the financial system but did not elaborate on other possible measures.
"The nuclear test, conducted in a scientific method and under specific calculations, did not cause any danger," North Korea's Central News Agency said. It was the first time the nation has announced a nuclear test.
China's government called the test a "brazen" disregard of international opinion in a statement posted on the Foreign Ministry's Web site, while Japan called for "decisive action."
"Everything, North Asia in particular, will feel the brunt," said Hans Goetti, a managing director in Singapore at Citigroup Private Bank. "It's bad for sentiment."
Hynix Semiconductor Inc, Asia's second-largest maker of computer memory chips, dropped 4.3 percent to 34,950 won.
Hyundai Engineering & Construction Co, South Korea's No. 2 contractor by market value, slumped 6.2 percent to 46,600 won.
Elsewhere in the region, National Australia Bank Ltd., the nation's biggest lender by assets, slid 0.8 percent to A$37.25.
Chartered Semiconductor Manu-facturing Ltd., which makes chips used in Microsoft Corp.'s Xbox 360 game machine, declined 1.7 percent to S$1.16. Esprit Holdings Ltd, which sells its own brand of apparel, lost 1.3 percent to HK$70.80 in Hong Kong.
Korean Air, the nation's biggest airline, slumped 5.6 percent to 32,100 won. Asiana Airlines Ltd, the second largest, lost 4 percent to 6,530 won.
Oil for November delivery climbed as much as 1.2 percent to US$60.50 a barrel in after-hours electronic trading on the New York Mercantile Exchange after Saudi Arabia and five other OPEC mem-bers agreed to cut output by 3.4 percent to stem a two-month slide in prices.