Mark Mobius on North Korea as Emerging Market: ‘Tremendous Opportunity’

Foreign investment icon Mark Mobius said that North Korea presents a “tremendous opportunity” for future international commerce.

President Donald Trump and North Korean leader Kim Jong Un’s recent historic summit in Singapore has emerging market investors interested in North Korea’s potential future on the world stage.

Experts are speculating whether North Korea, long a hermit country, will fully open its borders to more corporate-style Western investment.

Mark Mobius is the 30-year veteran of Franklin Templeton Investments and current founder of Mobius Capital Partners.

He sees outsize international business in potential infrastructure renewal and mining contract projects in North Korea.

Mobius points out that North Korea’s population of 25 million is an untapped global ready workforce.

Mobius also believes that its closed-economy represents an unrealized gold mine.

“We look at it first in terms of the mining capability, rare earths, oil, gas, there are tremendous resources in the North that could be exploited,” said Mobius.

“Then of course the consumption revolution will take place once the standard of living begins to move up.”

“So I’d say in the beginning it would be the resources and the transport, railroads, roads, going up north through to China and to Russia,” Mobius said.

North Korea’s internationally untapped reserves of natural resources could portend incredible opportunities.

According to a 2013 report by the North Korea Institute in Seoul, North Korea’s mineral reserves alone could be worth $6 trillion.

Still, some financial experts believe it is too soon to be dreaming of trade and investment with North Korea.

North Korea realities

The Singapore summit is seen to be more politically ceremonial in nature than substantive to some observers.

No hard-and-fast timelines or specifics for peace, denuclearization or other policy goals were presented after the summit.

North Korea’s workforce  are bereft of the social working skills taken for granted in the Western world.

It will take significant expenditure to retrain and socially update a workforce closed off from the modern world for decades.

Emerging market investors also will have to contend with the severely outmoded and dilapidated domestic infrastructure of North Korea.

International investors would have to rely on the notoriously unreliable and unpredictable negotiating tactics of North Korea itself to repatriate profits.

Leon Cornelissen, chief economist at Robeco in Rotterdam, believes that investors will stay calm whatever the outcome from the summit.

“If the summit would fail and the U.S. would return to beating the war drums, this basically should not unsettle markets too much,” said Cornelissen.

Investor fantasizing about North Korean commerce potential may be for naught for the foreseeable future. The first step has to be removal of sanctions, alongside some kind of serious disarmament process.

Neither process is quick or easy and it might take decades to create real change.

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