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AsiaPac Stocks, Won Tumble After Possible North Korea “Nuke Test”

Reports of an "artificial earthquake" in North Korea sparked a bout of risk off in AsiaPac stocks and the Korean Won as USGS says the 5.3 magnitude quake at zero depth is near past North Kore nuclear test sites.

  • *S. KOREA DETECTS ARTIFICIAL EARTHQUAKE IN N.KOREA AROUND 9:30AM
  • *S. KOREA GOVT CALLS FOR TASK FORCE ON POSSIBLE NUKE TEST:YONHAP
  • *5.3 MAG. EARTHQUAKE CHINA-NORTH KOREA BORDER REGION :EMSC
  • *USGS CITES 'POSSIBLE EXPLOSION' FOR M5.3 EVENT IN N. KOREA
  • *USGS: LOCATION NEAR PAST NORTH KOREA NUCLEAR TESTS
  • *JAPAN SAYS NORTH KOREA LIKELY CONDUCTED NUCLEAR TEST

As Bloomberg reports, the 5.1-magnitude earthquake in a similar location was recorded before North Korea’s fourth nuclear test in January at the site. The news agency said the test was at the same location.

  • *SUGA: JAPAN SEES POSSIBILITY N.KOREA QUAKE WAS NUCLEAR TEST
  • *S. KOREA FOREIGN MINISTRY HOLDS EMERGENCY MEETING: YONHAP

And the initial reaction is selling pressure in local currencies…

 

And stocks…

As AP reports, a second nuclear test this year would be a defiant response to Western pressure on Pyongyang to halt its nuclear ambitions. The country has previously conducted tests every three to four years.

Any test will lead to a strong push for new, tougher sanctions at the United Nations and further worsen already abysmal relations between Pyongyang and its neighbors. North Korean nuclear tests worry outside governments because they are seen as moving North Korea's scientists and engineers that much closer to their goal of an arsenal of nuclear-tipped missiles that can reach the United States.

 

North Korea is thought to have a handful of rudimentary nuclear bombs and has spent decades trying to perfect a multistage, long-range missile to eventually carry smaller versions of those bombs. After several failures, it put its first satellite into space with a long-range rocket launched in December 2012, and has since launched another such successful launch.

 

Experts say that ballistic missiles and rockets in satellite launches share similar bodies, engines and other technology. The U.N. calls the North's long-range rocket launches banned tests of ballistic missile technology.

 

Some analysts say the North hasn't likely achieved the technology needed to manufacture a miniaturized nuclear warhead that could fit on a long-range missile capable of hitting the U.S. But there is a growing debate on just how far the North has advanced in its secretive nuclear and missile programs.

The question is – what does it take to prompt a retaliation from South Korea (or its big brother 'Murica)?