Seoul: South Korean stocks closed lower Monday as investors expressed caution over the impact of global credit rating agency Moody's downgrade of the United States' credit rating. The local currency weakened against the U.S. dollar. According to Yonhap News Agency, the benchmark Korea Composite Stock Price Index (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 (US$4.79 billion), with losers outnumbering 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 a net 194.76 billion won and 113.88 billion won worth of stocks, respectively, while individuals purchased 298.67 billion won worth of shares.
Investor sentiment was affected by news that Moody's downgraded the U.S. sovereign credit rating by one notch, from Aaa to Aa1, on Friday, citing concerns over the country's increasing 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, commented.
South Korea's finance ministry warned of heightened volatility and pledged to closely monitor financial and foreign exchange markets, while indicating that the downgrade is expected to have only a limited impact. Tech and auto shares lost ground, weighing on the index.
Market bellwether Samsung Electronics fell 1.76 percent to 55,800 won, and SK hynix sank 2.49 percent to 199,400 won. Top carmaker Hyundai Motor tumbled 1.44 percent to 191,000 won, and Kia Motors dipped 0.54 percent to 91,500 won. Defense giant Hanwha Aerospace shed 0.24 percent to 839,000 won, while 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, with Samsung Biologics rising 2.59 percent to 1.03 million won, while Celltrion remained unchanged at 154,000 won. 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.