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What the Trump-Kim summit means for ETFs

United States, North Korea, Donald Trump, Kim Jong-un

US President Donald Trump and North Korea’s Supreme Leader Kim Jong-un have signed a “historic document” in Singapore this week, with the meeting triggering rumbles in the ETF sphere.

The long-awaited summit, which Mr Trump described as “top of the line”, resulted in the signing of a document pledging denuclearisation from North Korea and security guarantees from the US.

While the details of the commitment remain vague, some ETF investors have taken strong stances.

“We have one South Korean specific country ETF in the US that saw significant outflows on Friday, which is pre-summit,” ETF Securities Australia associate director Kanish Chugh told Nest Egg on Tuesday.

“That particular view is taken by an institutional investor most likely, because volumes in that product are fairly low, so we believe that could be one or two institutional investors.”

He said that movement reflected a negative view about the results of the summit, noting the respective dives in the Korean and US markets upon Mr Trump’s temporary cancellation of the summit.

In the wake of the summit, but in continued times of geopolitical tension, Mr Chugh said safe haven assets are generally a “good place to be”.

“Things like physical gold, physical silver, US dollar, even the yen could be a safe haven play as well,” he said.

Mr Chugh said taking a country-specific tilt is an alternate means of reaping the benefits of geopolitical events.

“Taking country-specific or region-specific tilts, so emerging markets or Asian equities that may have a larger allocation to South Korea, for example, could be an interesting way to play,” he said.

“There's a lot of key events happening around the world, so it's going to be interesting to see how the investment landscape unfolds.”

What the Trump-Kim summit means for ETFs
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