LONDON: Emerging market assets still felt on Thursday the reverberations of the standoff between Washington and Pyongyang, with stocks extending losses for a second day while currencies fared more mixed.
In a war of words between Washington and Pyongyang that has unnerved regional powers and global investors, North Korea dismissed as a "load of nonsense" warnings by US President Donald Trump that it would face "fire and fury" if it threatened the United States.
And it outlined detailed plans for a missile strike near the Pacific territory of Guam.
MSCI's emerging market index - dominated by Asian heavyweight bourses such as South Korea and Taiwan - slipped 0.6 percent, having lost 1.5 percent since Trump's comments.
Taiwan's bourse tumbled 1.3 percent, Hong Kong's Hang Seng lost 1.1 percent and South Korea's KOSPI dropped as much as 1.2 percent to a two-month low before trading 0.4 percent lower.
Gains elsewhere failed to offset the Asian losses. Turkey and Russia indexes gained 0.4 percent while South African stocks edged 0.1 percent higher.
Investors faced a dilemma in how to price the latest political tensions, said Koon Chow, FX strategist at UBP.
"Most investors will be completely out of their depth in making any assessment on the situation, therefore one shouldn't make a big call on this," he said.
Still, emerging markets would likely face a softer patch as long as the political tensions fuelled investors' risk aversion, he said.
"The moment that shows some kind of abeyance, you will see emerging markets strengthen again," he said, adding developing economies still faced a benign backdrop overall thanks to little sign of monetary tightening by major central banks.
Emerging currencies fared mixed against a slightly stronger dollar.
While the South Korean won weakened 0.3 percent and touched a four-week low, extending a selloff from the previous two sessions.
However, South Africa's rand firmed 0.4 percent, recovering from the four-week low it hit after President Jacob Zuma survived a no-confidence vote.
Russia's rouble strengthened 0.3 percent, lifted by oil prices snapping two days of decline on US crude inventories falling more than expected.
The Philippine central bank left its benchmark interest rate unchanged as expected, with inflation not a concern even as the economy expands at a solid pace this year.
Central banks in Serbia, Mexico and Peru, also due to publish their decisions on Thursday, are also expected to keep rates unchanged.
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