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Korean shares, won on the downswing after U.S. credit downgrade

Published: 19 May. 2025, 17:45

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,603.42 points on May 19, down 23.45 points, or 0.89 percent, from the previous trading session. [YONHAP]

Shares closed markedly lower Monday as investors grew cautious over the impact of Moody’s Ratings' downgrade of the United States' credit. The local currency weakened against the dollar.

The Kospi lost 23.45 points, or 0.89 percent, to close at 2,603.42.

Trade volume was thin at 309.7 million shares worth 6.69 trillion won ($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 had downgraded the U.S. sovereign credit rating from Aaa to Aa1 on Friday citing the country's rising deficit and interest costs.

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

Korea's Ministry of Economy and Finance warned of heightened volatility and pledged to closely monitor financial and foreign exchange markets while noting that it expected the downgrade to have 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.

Defense giant Hanwha Aerospace dropped 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.

Bond prices, which move inversely to yields, closed lower. The yield on three-year Treasurys rose 4.7 basis points to 2.366 percent, and the return on the benchmark five-year government bonds added 5.6 basis points to 2.501 percent.

Yonhap