Asian financial crisis

The Asian financial crisis was a financial crisis that started in July 1997 in Thailand, and affected currencies, stock markets, and other asset prices of several Asian countries, many part of the East Asian Tigers. It is also commonly referred to as the Asian currency crisis or locally, although inaccurately, as the IMF crisis.

South Korea

South Korea is the world's 11th largest economy. Macroeconomic fundamentals were good but the banking sector was burdened with non-performing loans. Excess debt would eventually lead to major failures and take-overs. For example, in July, South Korea's third largest car maker, Kia Motors asked for emergency loans. In the wake of the Asian market downturn, Moody's lowered the credit rating of South Korea from A1 to A3, on November 28, 1997, and downgraded again to Baa2 on December 11. That contributed to a further decline in Korean shares since stock markets were already bearish in November. The Seoul stock exchange fell by 4 percent on 7 November 1997. On November 8, it plunged by 7 percent, the biggest one-day drop recorded there to date. And on November 24, stocks fell another 7.2 percent on fears that the IMF would demand tough reforms. In 1998, Hyundai Motor took over Kia Motors.

Related Topics:
South Korea - Kia Motors - Moody's - Credit rating - November 28 - 1997 - December 11 - 7 November - November 8 - November 24

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