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North Korea’s leader Kim Jong-il dies

His youngest son, of three, Kim Jong-un is tipped to be his successor

Kim Jong-il, the 69 year old leader of the reclusive North Korea, and known back in the country as “the Dear leader” has died according to media reports, citing North Korean state television, KCNA news agency, as a source.

His youngest son of three, Kim Jong-un is said to be his successor after the leader recovered from a reported stroke in 2008 and has since appointed Jong-un as a general last year among many other high profile roles in politics. 

During the time the leader of the “hermit state”, Kim Jong-il was in power, the country’s economy slipped further and further into deep poverty. Due to the restrictive nature of entering or photographing within North Korea, there is only a small selection of Western and non-state released pictures of the reclusive state, which includes this slideshow from the UK’s BBCaround 6 years ago.

The second picture in that slideshowshows an eerie picture of an enormous highway, but is in fact empty as most people are too poor to afford food from state-owned “department stores or shops” let alone cars. Most of the BBC analysis on this slideshow is fraught with caveats of possibly state engineered scenarios.

The North Korean propaganda machine portrayed him firstly as a

.... in elementary school he showed his revolutionary spirit by leading marches to battlefields where Korean rebels fought against Japanese occupiers of the peninsula.
By the time he was in middle school he had shown himself to be an exemplary factory worker who could repair trucks and electric motors.
He went to Kim Il-sung University where he studied the great works of communist thinkers as well as his father's revolutionary theory, in a systematic way, state propaganda said.
North Korea analysts said however, Kim lived a life of privilege in the capital, Pyongyang, when his family returned to the divided peninsula in 1945. 

Stories released by the state, even the seemingly trivial, all sought to deify him, which even included the majestic claim that

In 1994, Pyongyang media reported that Kim Jong-il shot an amazing 11 holes-in-one to achieve an unprecedented 38-under-par game on a regulation 18-hole golf course - on his first try at golf.

Not forgetting one of the most important elements to North Korea’s role on the world stage, is the approach to the nuclear arms programme. Analysts say the country’s “abject poverty” is due to all state money being “funnelled into nuclear arms developments”, which has led former U.S. President George W. Bush to dub Kim Jong Il as the ruler of "an outpost of tyranny." 

With his death, there has been a negative effect on the Asian markets as a whole and not just the South Korean bourse. 

South Korea’s Kospi [KR:0100 -3.43%] at 1,776.93
China’s Shanghai Composite [CN:000001 -0.30%] to 2,218.24
Japan’s Nikkei Stock Average [JP:NIK -1.21%] to 8,296.12.
Hong Kong’s Hang Seng Index [HK:HSI -1.18%] to 18,070.21
Australia’s S&P/ASX 200 index [AU:XJO -2.38%] to 4,060.40
Taiwan’s Taiex - 2.2% to 6,633.33.

Also, immediately after Kim Jong Il’s death was announced, the Won fell 1% against the US Dollar.

The news will no doubt shake the markets in the short term, but also make a significant impact to political and financial risk and analysis of the “hermit state.”

On 7th December, one of the global markets most distinguished political analysts Alastair Newton, who has also travelled and stayed in North Korea, released one of his reports from his “Issues Which Keep Me Awake At Night” series:

Updated Preliminary Outlook 2012 (2) POLITICS REMAINS PIVOTAL
Continuing tensions could lead to more ‘bad behaviour’ by North Korea in the run-up to the 100th anniversary of Kim il-Sung’s (Kim Jong Il’s father) birth on 15 April and/or South Korea’s 19 December presidential election.

Moreover, he also points out that the following points individually, let alone collectively, these events stand to encourage leaders to play to domestic audiences at the risk of increased international tensions: 

2012: A Potential 'Perfect Storm' Politically?

– China: the handover of power from the 4th to the 5th generation leadership;
– United States: Presidential and Congressional elections on 6 November;
– Taiwan: Presidential and legislature elections on 14 January;
– North Korea: 100th anniversary of the birth of Kim Il-sung on 15 April.

Don’t forget to check out Euromoney later this week for more updates on the market and economic impact. 

- Euromoney Skew Blog