South Korean Stocks Plummet Amid Global Credit Rating Agency Downgrade

Strategic Insights -

Investors in South Korea became increasingly cautious on Monday as the global credit rating agency Moody's downgraded the United States' credit rating. The move led to a significant decline in the local currency against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) lost 23.45 points, or 0.89 percent, to close at 2,603.42. Despite initial hopes of a market correction, investor sentiment remained dampened.

Key Takeaways:

  • The Korea Composite Stock Price Index (KOSPI) lost 23.45 points, or 0.89 percent, to close at 2,603.42.
  • The local currency weakened against the U.S. dollar, with the won quoted at 1,397.8 won against the greenback.
  • Institutions and foreign investors sold off a net 194.76 billion won and 113.88 billion won worth of stocks, respectively.
  • Tech and auto shares, including Samsung Electronics and Hyundai Motor, suffered losses, weighing on the index.
  • Samsung Biologics soared 2.59 percent to 1.03 million won, while Celltrion remained unchanged at 154,000 won.

Statistics:

  • Trade volume was thin at 309.7 million shares worth 6.69 trillion won (US$4.79 billion).
  • Losers beat 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.
  • Bond prices closed lower, with the yield on three-year Treasurys rising 4.7 basis points to 2.366 percent.
  • The return on the benchmark five-year government bonds added 5.6 basis points to 2.501 percent.

Sources:

  • Yonhap News Agency (19 May 2025) South Korean stocks close sharply lower amid global credit rating agency downgrade.