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Is geopolitical uncertainty on the rise?

*Financial Times, by Lucy Hornby & Jonathan Soble, April 21, 2014

”A Chinese court has seized a Japanese ship over claims related to the second world war as tensions between the two countries spilled into the realm of commerce.

Japan was quick to slam the seizure, an unprecedented asset confiscation for wartime compensation.

‘This could have a chilling effect on all Japanese companies doing business in China,’ said Yoshihide Suga, the country’s top government spokesman.  ‘We are deeply apprehensive, and strongly hope that China will respond appropriately.’

The case comes at a time of escalating tension between China, Asia’s largest economy, and Japan, which for decades has been the region’s most advanced power, amid rising nationalism in both countries.

In recent years, sparring over uninhabited islands administered by Japan and claimed by China has caused tensions to flare in what some military analysts fear is the most dangerous faultline in Asia.  So far, the countries’ extensive economic ties have helped stabilise the relationship.

‘Overall China is dissatisfied with Japan, so a lot of matters have re-emerged,’ said Shen Dingli, an expert in Northeast Asian geopolitics at Fudan University in Shanghai.  ‘In the past they might have discouraged suits like this but now they don’t stand in the way.’

Japan has consistently argued that the peace treaties it signed after the war exempt it from having to pay compensation to individuals or companies in former enemy countries.

But China and South Korea, which nurse the strongest resentment over Japan’s often brutal imperial expansion, counter that the agreements only cover government-to-government reparations, leaving private groups free to sue for damages.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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