No impact of N Korea test on Indian market, says analyst

North Korea has conducted its first nuclear test. Asian markets slipped on this news with the Kospi (the South Korean Stock market index) plummeting nearly 3 per cent.

Puru Saxena, CEO, Puru Saxena Wealth Management, believes that there could be a sell-off in Korean equities following this news. However, he feels that there will not be any major sustainable impact on Indian equities.

He further states that one should use this news as a major buying opportunity in Asian markets. CNBC-TV18 shares with domain-b its interview with Saxena.

How have Asian fund managers reacted to this news? Do you expect markets like India to be impacted as well?
I would use this as a major buying opportunity because we should keep that in mind that all they have done, is tested a nuclear missile or a nuclear bomb in their own country.

It is not as though, North Korea has launched a nuclear bomb on another country and the market seems to be reacting in that manner. I think that this is a knee-jerk reaction as people get concerned about the region. But I don't foresee any major conflict any time soon. So I would use this is as a major buying opportunity in Asian markets.

Would this lead to North Asia becoming a hotspot?
It may impact over the next few days. However, if one looks at the economic fundamentals, the economies are doing very well. If one looks at India, the Indian economy is growing at almost 9 per cent to10 percent a year.

The foreign exchange reserves are building very rapidly. The same case holds true for the other economies. In fact, the emerging economies now account for 70 per cent of the foreign exchange surpluses or foreign exchange reserves.

How would a fund manager sitting in the US react to this initially?
I think they may sell off the Korean equities, that is why we have seen a sell off already in Korea. I personally don't think it will have any major impact on the Indian market because India is so far away from Korea.

It doesn't really have any correlation directly because exports in India are only about 14 per cent of GDP. So I don't think there will be any impact or any major sustainable impact on the Indian equities.