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Key Points

South Korean stocks experienced a significant decline following Moody's downgrade of the US credit rating. The benchmark KOSPI index lost 0.89%, with tech giants like Samsung Electronics and automotive companies bearing the brunt of the market correction. Institutional and foreign investors sold off substantial stock volumes, reflecting broader market nervousness. Korea's finance ministry reassured markets, suggesting the impact would be limited.

Key Points: Seoul Stocks Sink After Moody's US Credit Downgrade

  • - KOSPI drops 0.89% on Moody's US credit rating downgrade
  • Samsung Electronics falls 1.76%
  • Foreign investors sell Korean stocks
2 min read

Seoul shares fall on US credit downgrade jitters

Korean market tumbles as Moody's downgrades US credit rating, tech and auto stocks lead losses amid global financial uncertainty

"The rating downgrade could trigger a market correction - Han Ji-young, Kiwoom Securities"

Seoul, May 19

South Korean stocks closed markedly lower on Monday as investors grew cautious over the impact of global credit rating agency Moody's downgrade of the United States' credit rating. The local currency weakened against the US dollar.

The benchmark Korea Composite Stock Price Index (KOSPI) lost 23.45 points, or 0.89 percent, to close at 2,603.42, reports Yonhap news agency.

Trade volume was thin at 309.7 million shares worth 6.69 trillion won (US$4.79 billion), with losers beating winners 642 to 240.

The index opened lower and extended its losses to drop more than 1.2 percent before trimming some of the earlier declines.

Institutions and foreign investors sold off a net 194.76 billion won and 113.88 billion won worth of stocks, respectively, while individuals bought 298.67 billion won worth of shares.

Investor sentiment was dampened by news that Moody's downgraded the U.S. sovereign credit rating by one notch, from Aaa to Aa1, on Friday (U.S. time), citing concerns over the country's ballooning deficit and rising interest costs.

"The rating downgrade could trigger a market correction, though it is expected to remain a short-term factor," Han Ji-young, a researcher at Kiwoom Securities, said.

South Korea's finance ministry warned of heightened volatility and pledged to closely monitor financial and foreign exchange markets, while noting that the downgrade is expected to have only a limited impact.

Tech and auto shares lost ground to weigh on the index.

Market bellwether Samsung Electronics fell 1.76 percent to 55,800 won, and its rival SK hynix sank 2.49 percent to 199,400 won.

Top carmaker Hyundai Motor tumbled 1.44 percent to 191,000 won, and its sister Kia Motors dipped 0.54 percent to 91,500 won.

Defence giant Hanwha Aerospace shed 0.24 percent to 839,000 won, and No. 1 steelmaker POSCO Holdings retreated 0.81 percent to 245,500 won. Top online portal operator Naver decreased 1.28 percent to 185,400 won.

Bio shares finished mixed. Leading biotech firm Samsung Biologics soared 2.59 percent to 1.03 million won, while Celltrion remained unchanged at 154,000 won.

But major battery maker LG Energy Solution rose 0.34 percent to 291,500 won, and leading chemical firm LG Chem climbed 1.14 percent to 195,800 won.

The local currency was quoted at 1,397.8 won against the greenback at 3:30 p.m., down 8.2 won from the previous session.

- IANS

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Reader Comments

R
Rahul K.
This shows how interconnected global markets are! Even though it's South Korea today, Indian markets could face similar volatility if US economic health deteriorates further. Our RBI should be prepared with contingency plans. 🇮🇳
P
Priya M.
Interesting to see Samsung and Hyundai stocks falling - these are companies many Indians use daily. Maybe good time to buy Korean stocks if planning long-term investments? Their fundamentals remain strong despite this temporary dip.
A
Amit S.
Moody's downgrade is worrying but not surprising. US debt has been growing for years. India should reduce dollar dependence and promote rupee trade with friendly nations. Atmanirbhar Bharat is the need of the hour!
N
Neha T.
The bio shares performing well is notable. Indian pharma companies should watch this space - Korea's biotech sector is booming while ours still has untapped potential. Maybe time for more R&D investments?
V
Vikram J.
While everyone talks about US impact, let's not forget China factor. If US economy weakens, China may try to fill the vacuum. India needs to be strategic in both economic and geopolitical terms. Interesting times ahead!
S
Sunita R.
The won weakening against dollar means Korean products might get cheaper for Indian importers. But our exporters to Korea may suffer. Global economics is always double-edged sword no? 🤔

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