South Korea — and its President Moon Jae-in — may be the biggest losers after a summit between U.S. President Donald Trump and North Korean leader Kim Jong Un ended without a deal, analysts said.
Trump and Kim met in Hanoi, Vietnam for a two-day meeting that ended Thursday. The summit was cut short on the final day after both sides failed to agree on denuclearizing North Korea and lifting economic sanctions on Pyongyang.
"South Korea loses the most from the Hanoi summit ending without agreement," according to Alison Evans, deputy head of Asia Pacific country risk at consultancy IHS Markit.
For Seoul, Thursday's developments dimmed prospects of re-starting inter-Korean projects that have been stalled by sanctions, Evans wrote in a Thursday note. Political support for Moon could also fall further, she added.
"Importantly, Moon's support rating has fallen steadily ... Without progress on North Korea, Moon's domestic agenda becomes his only metric of success for voters, who have already criticised his administration for failing to deliver on economic metrics such as unemployment," she added.
Since taking office in 2017, Moon has largely counted on his push for improved relations with North Korea to shore up political support.
The South Korean president met with Kim three times last year — their meeting in April was the first in more than a decade that leaders from both sides talked face-to-face. Moon also played a major role in brokering the meetings between Trump and Kim in Singapore and Vietnam.
In a Friday speech, Moon attempted to put a positive spin to the failed talks in Vietnam.
"I believe this is part of a process to reach a higher level of agreement. Now our role has become even more important," he said. "My administration will closely communicate and cooperate with the United States and North Korea so as to help their talks reach a complete settlement by any means."
Critics have hit out at the South Korean president, saying that his focus on their northern neighbor has sidelined more pressing economic issues at home. After Thursday's breakdown in talks between Trump and Kim, criticisms of Moon will likely grow louder, according to analysts from consultancy Eurasia Group.
"South Korean President Moon Jae-in will face even stronger criticism from conservatives at home who have long argued that he is too soft on Kim and too optimistic about Kim's willingness to denuclearize," the analysts wrote in a Thursday note.
"Disappointing news about the summit will likely further darken business, investor, and consumer sentiment in South Korea," they added.
South Korean markets fell on Thursday after the White House announced that the summit between Trump and Kim was cut short. The markets were closed on Friday for a holiday.
— Reuters contributed to this report.