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South Korean Markets Slide Following U.S. Credit Downgrade

The KOSPI dropped nearly 1% and the won weakened as investors reacted to Moody's downgrade of the U.S. sovereign credit rating.

This photo shows the dealing room at Hana Bank in central Seoul on May 20, 2025. (Yonhap)
Officials work at a dealing room of Hana Bank in Seoul on May 19, 2025. (Yonhap)
Officials work at a dealing room of Hana Bank in Seoul on May 19, 2025. (Yonhap)
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Overview

  • The KOSPI closed down 0.89% at 2,603.42 on May 19, reflecting institutional and foreign investor sell-offs.
  • Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, citing rising deficits and debt costs, which unsettled global markets.
  • The South Korean won weakened to 1,397.8 per dollar, marking a decline of 8.2 won from the previous session.
  • Tech and auto stocks, including Samsung Electronics and Hyundai Motor, saw losses, while biotech and battery shares like Samsung Biologics gained.
  • South Korea's finance ministry pledged to monitor financial and FX markets closely, emphasizing that the downgrade's impact should remain limited.