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Barclays chairman on North Korea: Unless threats worsen, 'markets will take it in stride'

Key Points
  • Markets will eventually take North Korea in stride unless the "substance of threats increases," Barclays Chairman John McFarlane said at the Singapore Summit
  • His comments came after North Korea launched another missile early Friday

North Korea may be alarming investors with its repeated missile launches, but markets will take the development in stride over the long term unless the threat of the pariah state worsens, Barclays Chairman John McFarlane said Friday.

Asia woke up to news that the hermit state launched another missile early Friday, which landed in the sea after passing over Japan. Most indexes in the region edged down, though the knee-jerk reaction to buy safe-haven currencies unwound fairly quickly.

A North Korea Scud-B missile is displayed at the Korea War Memorial Museum on August 26, 2017 in Seoul, South Korea.
Chung Sung-Jun | Getty Images

"Political uncertainty leads to economic uncertainty and these things are inter-dependent. The markets so far have taken the posture in its stride. My sense is there'll be some noise in the markets in the short run, but I think unless the substance of the threats increases, markets will take it in its stride," McFarlane told CNBC at the sidelines of the Singapore Summit.

Commenting on how political leaders around the world, including U.S. President Donald Trump, are handling the situation with North Korea, McFarlane said sanctions are "the natural way to go" to try to get "more realistic outcome."

However, he added that he doesn't think a resolution is in sight yet.

Political uncertainties aside, the banking veteran said global growth will continue to be moderate, especially as developed markets are still registering soft economic data.

While many are worried that the Trump administration's protectionist inclination may pose more harm to the world economy, McFarlane said globalization is not threatened by the new president and his policies.

"I've seen business people go into politics and it's always very difficult for them in the early stages ... Seasoned politicians know how to get things done, I think Donald Trump is looking for economic outcomes and therefore will try and get more activity in the U.S. in that context," McFarlane said.

"I don't think there's a real threat to globalization. Economic activity will flow to where the competitive advantage is and where the costs are lower," he added.

— CNBC's Jacob Pramuk and Cheang Ming contributed to this report.