Market watchers said the focus would move to whether power shift to Kim Jon-il's third son Kim Jong-un was to be made smoothly.
South Korea's financial market was rocked Monday after North Korea's supreme leader Kim Jong-il died.
Market watchers said the focus would move to whether power shift to Kim Jon-il's third son Kim Jong-un was to be made smoothly, reported Xinhua.
North Korea's official KCNA news agency said that Kim died "from a great mental and physical strain at 8.30 Dec 17, 2011, on train during a field guidance tour".
Following the news of Kim's death, the benchmark Korea Composite Stock Price Index (KOSPI) in Seoul tumbled nearly 4 percent at one time during the session before trimming its earlier losses to close at 1,776.93, down 3.43 percent from Friday's close.
Experts said Kim's death would not change South Korea's economic fundamentals, but they cautioned that there remained uncertainties over whether the handover of power to Kim Jong-un, who is in his late 20s and vice chairman of the Central Military Commission, would be performed smoothly.
"The handover to Jong-un might look smooth from the outside, but there is considerable doubt over the loyalty of insiders who may have been waiting for the late Kim's passing to seize power ahead of the undistinguished son in his late 20s," said Sean Callow, a senior currency strategist at Westpac Banking in Sydney.
Callow noted that the handover to Kim Jong-il in 1994 was quite extended before the late Kim's father Kim-il Sung died at the age of 82, saying that the preparation for Jong-un's succession has been relatively limited in comparison.
"When (North Korea's) former leader Kim-il Sung died in July 1994, the KOSPI moved in a narrow range of around 10 points before rebounding days later. But Kim Jong-il's death may cause more volatility in the local stock market as uncertainties remained over the handover of power to next leader Kim Jong-un," Kang Hyun-gie, a strategist at Solomon Investment & Securities in Seoul, told Xinhua.
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