North Korean officials have reportedly stated that their leader Kim Jong-Un’s willingness to scrap its nuclear program, in exchange for security guarantees from the United States, South Korean officials said after their two-day visit to Pyongyang. 
“North Korea made clear its willingness to denuclearize the Korean peninsula and the fact there is no reason for it to have a nuclear program if military threats against the North are resolved and its regime is secure,” Chung Eui-yong, head of the South Korean delegation, said. 
President Donald Trump was quick to respond. “I think that they are sincere. And I think they’re sincere also because of the sanctions and what we’re doing with respect to North Korea, including the great help that we’ve been given from China,” Trump said at a news conference. U.S. stocks extended gains following talks of possible denuclearization.
Hidden Agenda?
Despite these reports of possible denuclearization, pessimism is still in play, as various analysts argue this sudden change of stance smells of foul play. Given the history of previous talks with Kim’s regime, they can’t be blamed for the scepticism. 
Experts suggest that there can be multiple reasons behind this sudden plan of offering to scrap the nuclear program. Some analysts have argued that it is just an attempt to make Seoul and Washington look the other way and gain relief from sanctions, while Kim’s regime works on its nuclear program.
"If past experiences are anything to go by, Kim Jong Un is hoping to extract a loosening of sanctions or other assistance by feigning a willingness to disarm," Miha Hribernik, senior Asia analyst, Verisk Maplecroft, told CNBC, adding, "The North Korean economy is straining under the weight of sanctions, forcing the country to resort to a well-worn playbook."
It is possible that the negotiations may not return a positive outcome, if Kim asks for something that the United States is not willing to agree to, for example, removal of U.S. troops from the Korean peninsula. The possibility of such demands is very high, given Kim’s long-standing wish to send U.S. troops home. Kim has been a vocal critic of the joint U.S.-South Korea drills and has stated his fears surrounding his regime’s security owing to the drills. 
“All options are on the table and our posture toward the regime will not change until we see credible, verifiable, and concrete steps toward denuclearization,” Vice President Mike Pence said in a statement.
“I’d caution against too much optimism because we’ve been down this road too many times before,” said Abraham Denmark, a former Asia official at the Pentagon. 
However, this is still some progress and is better than no talks at all. Merely exchanging threats and testing missiles has done no party any good. As a result, even if it’s a long shot, it’s still a step in the right direction.
Let us now discuss a few ETFs that are likely to be impacted by possible talks between the concerned nations. 
This fund is the most popular ETF traded in the U.S. markets. It seeks to provide exposure to the largest and most stable companies and tracks the S&P 500 index. 
It has AUM of $270.3 billion and charges a fee of 9 basis points a year. From a sector look, the fund has high exposures to Information Technology, Financials and Health Care with 25.1%, 15.0% and 13.8% allocation, respectively (as of Mar 5, 2018). The fund’s top three holdings are Apple Inc AAPL, Microsoft Corporation MSFT and Inc AMZN with 3.9%, 3.1% and 2.6% allocation, respectively (as of Mar 5, 2018). The fund has returned 17.0% in a year. It has a Zacks ETF Rank #3 (Hold), with a Medium risk outlook.
iShares MSCI South Korea Capped ETF EWY
This fund is the most popular in the space offering exposure to South Korean equities.
It has AUM of $4.2 billion and charges 62 basis points in fees per year. From a sector look, Information Technology, Financials and Consumer Discretionary take the top three spots, with a 35.4%, 14.0% and 11.9% allocation, respectively (as of Mar 5, 2018). Samsung Electronics Ltd, Sk Hynix Inc and Celltrion Inc are the top three stocks with 21.5%, 5.3%, and 3.6% allocation, respectively (as of Mar 5, 2018). The fund has returned 33.0% in a year. It has a Zacks ETF Rank #1 (Strong Buy), with a Medium risk outlook.
Depending on how the talks pan out, multiple other ETFs like iShares China Large-Cap ETF FXI, iShares MSCI Japan ETF EWJ might also be impacted, given trade relations and proximity to the region.
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