Seoul: South Korean stocks traded lower late Monday morning as the downgrade of the United States' credit rating heightened investors' risk aversion sentiment. The benchmark Korea Composite Stock Price Index (KOSPI) lost 25.38 points, or 0.97 percent, to 2,601.49 as of 11:20 a.m. The index opened lower and extended losses further on selling by foreign and institutional investors.
According to Yonhap News Agency, market participants remain cautious amid heightened volatility after global credit rating agency 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. South Korea's finance ministry said it will closely monitor financial and foreign exchange markets at home and abroad, though the downgrade is expected to have a limited impact.
In Seoul, chip shares lost ground to drag down the index. Market bellwether Samsung Electronics sank 1.85 percent, and chip giant SK hynix tumbled 2.25 percent. Auto shares also lost ground. Top automaker Hyundai Motor went down 191 percent, and its sister affiliate Kia dipped 1.3 percent.
Defense giant Hanwha Aerospace sank 1.07 percent, and No. 1 steelmaker POSCO Holdings retreated 0.81 percent. In contrast, major bio firm Samsung Biologics went up 1.3 percent, and leading battery maker LG Energy Solution advanced 0.86 percent.
The local currency was trading at 1,398.75 won against the U.S. dollar at 11:20 a.m., down 9.15 won from the previous session.